Latest research from a property website reveals a growing gap between the views of buyers and sellers on the property market.

Sellers are far more optimistic on the outlook for house prices and expect prices to rise 3.5% over the next 12 months. Buyers on the other hand are more negative and expect prices to fall 0.7% over the next 12 months. This pattern has asserted itself strongly since the end of summer 2004.

Buyers and sellers had relatively similar views on the outlook for the housing market for the first half of 2004 when the market was trading relatively briskly. As confidence in the market began to plummet in the late summer, buyers’ expectations fell much more dramatically than sellers' did.

As interest rate fears have receded, overall confidence in the market has improved sharply since the low point in November, when 72% of all survey respondents expected prices to fall. Now 58% expect them to rise, but buyers’ optimism has improved far more slowly than sellers’ said the property website, propertyfinder.com.

Further evidence of the stand-off comes from asking prices and offers. In February buyers on average made offers 5.2% below the asking price. Sellers, however, said they were prepared to entertain offers only 3% below the asking price on average. What’s more, 18% of sellers said they would only accept offers of the full asking price.

Buyers sit on their hands

The final piece of the picture comes from the time that people have been house hunting. This has now risen from an average of 16 weeks in January to over 20 weeks in February. This is yet another indicator that buyers are biding their time and not rushing into home purchases. There is no shortage of interest in the market: enquiries by potential buyers on the firm's website is double December levels so far in 2005, but this is not translating into transactions at present.

The result is reduced transaction numbers instead of lower prices

The result of this divergence of views on the market has been a sharp reduction in the number of housing transactions taking place as sellers are not adjusting their selling prices down to meet buyers’ expectations; indeed actual house prices have barely moved.

Jim Buckle, Managing Director of propertyfinder.com commented: "There’s no meeting of minds between sellers and buyers at the moment and stalemate is the result. Bargain-hungry buyers face stubborn sellers who won’t budge."

"People who are selling their homes are not being realistic on prices and clearly believe they are giving potential buyers a good deal with their asking price. With mortgages still affordable and indeed mortgage arrears continuing to fall, there are no forced sellers in the market. Those selling their homes therefore do not feel under pressure to ask lower prices."

"Buyers will stay in the slow lane for now, until sellers reduce asking prices modestly to more attractive levels."

Slow market is the outcome. Househunters no longer fear a crash

The market is more optimistic than the low point in November. 58% of respondents expect prices to rise over the coming twelve months, compared to a low point of 24%. Overall they expect prices to be broadly flat and therefore feel more comfortable about the market.

Regional differences are also less stark than in 2004. South of Leeds, house hunters broadly expect flat or falling prices and those to the North think the market will be more robust, but the differentials are small.