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House prices fall for the Fifth month in a row

House prices continue to slide in November with property website Rightmove reporting that sellers have cut prices by 3.2%, resulting in "the biggest monthly drop since December 2007". As Government spending cuts and tax rises become imminent, the future housing market looks bleak as many sellers adopt a 'wait and see approach'.
Concern within the industry is fuelled by the revelation that falls have been recorded in 4 out of the last 5 months with the average property price in England and Wales at just £229,379 (RICS UK Housing Market survey Oct 2010). Currently houses are staying on the market for longer and high numbers of unsold properties mean that there is stronger competition for sellers and equity rich buyers procrastinate as they wait for the bargains to appear.
The current climate of economic uncertainty makes it difficult for prospective purchasers to find lenders.
"With lending volumes at historic lows, stability in the mortgage market is the name of the game at the moment. With both consumer demand falling and funding capacity limited, neither supply nor demand look likely to feed through to any significant improvement in lending volumes as we head into winter," said Michael Coogan, director general at CML (Council of Mortgage Lenders)
The Government wants banks to build up their balance sheets, but this means buyers must find substantial deposits and be subjected to stringent credit checks. At present, the number of properties on market outnumbers new mortgage finance approvals by two to one. This makes it very difficult for first time buyers, who are exactly the people needed to help housing market recover.
As pressure for sellers to further reduce their prices continues, many find themselves 'trapped' in their own homes as they run the risk of not being able to cover the cost of their current mortgage or to raise the equity for a deposit elsewhere.

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