The number of properties coming on the market is almost twice that coming off, the biggest imbalance in 3 years said a report out today.

Rightmove's monthly report said 110,000 new sellers added to the growing over-supply, as stock levels per estate agent rise 6% this month to stand a third higher than a year ago.  

March February Average property asking Price £194,962 £193,830 % Change in month +0.6% +2.3% % Change in past year +8.6% +11.1% Monthly index (Jan 2002=100) 158.6 157.7 Source: Rightmove.co.uk

The onset of the traditional Easter home hunting season sees buyer interest continue to grow, though actual sales agreed remain below average for the time of year. As a result, properties coming off the market are far outweighed by new sellers coming on the market this month. Combined with a backlog of properties on the market from last year and a large volume of new instructions since January, stock levels remain at historically high levels.

Prospective purchasers, including first time buyers encouraged by the budget, are faced with a wide choice of properties in many areas, and can afford to be choosy in terms of what they want and tough on the price they are willing to pay.

While some new sellers have embraced the new market reality, many have not and are still being unduly optimistic on price, given this over-supply and the relative shortage of available buyers in a position to proceed. This over-optimism has pushed the price of properties coming onto the market over the past 2 months up to within £1,236 of the record set in July last year, the height of the price boom.

If they wish to take advantage of the busier spring market and sell before the summer lull, sellers need to be keen on the price they ask and ensure their properties are well presented to prospective buyers. Sellers who have curbed their price optimism appear to be selling quite well in an active ‘under market’… but at asking prices at around 10% below the peak boom prices of last year.

Prices rise this month, returning to last summer’s record levels

Asking prices increased by an average of £1,132 or 0.6% over the past 4 weeks, on top of last month’s sharp rise of £4,321 or 2.3%. This increase takes the average price at which properties are marketed almost back to the record level seen in summer 2004, wiping out all but £1,236 of the declines that have occurred since then.

"In the second half of 2004, sellers began to trim asking prices in response to slowing market conditions, as buyers reacted to the Bank of England’s successive rate rises," says Miles Shipside, Rightmove’s commercial director. "However, it was not a big outbreak of common sense, and asking prices only fell by a total of about 3.4% from the peak of £196,198 to the trough of £189,509."

"Since New Year, over-optimistic sellers and estate agents competing for market share of new instructions have pushed asking prices up again. At £194,962 it’s now back at the levels seen in late July 2004, before the last base rate hike. It defies the commercial logic that over-supply should lead to more competitive pricing," said Mr Shipside.