Pent Up Demand from Buyers Restrained by the Mortgage Market

Stuart Law, Chief Executive of Assetz, responds to the latest Rightmove index, which has reported a 1.2% increase in asking prices for May:

"This is the second strong increase in asking prices recorded by Rightmove this year, and the second time that Miles Shipside has cited vendors as being unrealistic, calling for them to accept that the market has fallen and reduce their asking prices. However, Mr. Shipside’s motivations must be questioned – Rightmove’s share price and business model is reliant on a high level of transactions.

“While I accept that repossessions will be up on last year, the number of distressed sellers in the market is still marginal with the majority of vendors happy to ride the storm. Most are confident that they will be able to achieve their asking price and are clearly not interested in accepting low bids from buyers who are perhaps reading too much into the negative sentiment. The facts remain, prices themselves are down only around 1% since January (across all major indices).”

Law adds:

“There is currently a great deal of pent up demand from buyers who are eager to buy but cannot secure the necessary finances. As a result, as soon as the mortgage market improves, we are likely to experience a surge of activity as buyers flood the market and prices return to a steady upward trend in 2009.”