Buyers Ask For Large Discounts
With some sellers desperate to sell, buyers are asking for discounts - some as much as 20% - according to a Bank of England report. Meanwhile, news coming out of the Bank is that their fears for inflation have eased in the light of falling oil prices, and the next interest rate movement could be downward.
When house prices are tumbling, it is certainly a buyers’ market, and buyers are doing all they can to bag a bargain. It seems that some are demanding as much as 20% as a discount off the selling price of houses, according to the Bank of England.
The brazenness of doing so serves further to demonstrate the weak state of the property market as further warnings come about banks’ problems as the credit crunch continues.
In line with other reviews of the state of the market, the Bank said that it was the lack of availability of mortgages that was pulling buyers and sellers further apart when trying to agree a price for the sale of a property. Its report said that uncertainty with valuations was putting off some potential buyers, and others were asking for discounts of 10-20% off the asking price.
In addition, some buyers who are supposed to buying directly from builders are pulling out of the proposed deal, even giving up their 10% deposits rather than entering a market which, currently, may actually lose them even more money as the value of the property sinks below their mortgage to buy it.
Buyers are taking a ‘wait and see’ stance, which, of course, only means that property prices will indeed sink further, in a kind of self-fulfilling prophecy. Some experts have suggested that house prices could sink 30% over this and next.
There has been another drop in mortgage lending. The Council of Mortgage Lenders says that there was a drop of 27% in lending in July, and forecast subdued lending levels for the remainder of 2008.
Some good news coming from the Bank of England is that they seem to be considered a cut in interest rates. As recession in the UK appears more likely, the Bank says that risk of higher inflation has eased back a little as oil prices have come down in the last few weeks. An interest rate cut would be most welcome for the mortgage industry.
