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Despite the housing market having been at a very low ebb for some time, especially in the London area, only recently have sellers accepted that they have to recognize the situation and adjust their prices accordingly.Until a few weeks ago they appeared to have seriously misjudged the effect of the credit crunch and have been reluctant to adjust their prices to match the current circumstances, with the result that successful selling has largely been achieved only by those who have been prepared to trim a significant sum off their asking price.

Some hopeful sellers have accepted that prices peaked last year and that a reduction in the asking price has become essential if they are to stand any chance of closing a deal, but despite this many have been over optimistic.Even as recently as four weeks ago they were hoping that a price reduction of 5.4% would be sufficient, whereas the more realistic ones were having to apply reductions of around 20% before the proposed price would be accepted.

Reductions of this magnitude on London prices can represent a considerable sum, especially when applied in the areas where asking prices are usually at or near the top of the range.So although property search engine Globrix reports average reductions of 28,796 in London generally over a two week period since the first half of November, the figures for specific areas are rather more startling.The average reduction in asking price for a home in Kensington and Chelsea has been 100,797, whilst in Westminster even this figure has been topped with an average of 108,166 off the asking price.

An example is a property in Kensington and Chelsea which in August was for sale at 499,950 the suitable price for a two-bedroom flat in pre-crunch days.This asking price has been reduced in two 50,000 stages (the last one being applied since the end of October) to a current 399,950.

Globrix have made the point that this is a very strong market for buyers, for whom excellent opportunities have opened up.Those with financial arrangements made and ready can now negotiate at price levels which until recently would have been regarded as preposterously low.They have issued results of tracking prices in less affluent areas of London, with results shown which follow the trend.In Lambeth and in Richmond the average reduction exceeds 40,000 and in Camden the average is over 55,000; in the lower cost areas such as Barking and Dagenham, Newham and Havering the averages were just below 12,000.

Estate agents Dreweatt Neate have said that prices are plummeting and to stand any chance of a sale the potential seller has to follow the trend or accept minimal chances of any interest by buyers.This reasoning is being taken up by sellers who find that their property has hung fire for some time, and by new sellers who have also by and large got the message and whose prices are following the downward trend.

The situation is unfortunate for those who have to sell due to a change of employment or similar unavoidable circumstances, but a slightly brighter point for many sellers is that they will also be buyers.They will then take the fullest possible advantage of the situation and will stand to gain some if not all of the amount which they lost as sellers.

With money for loans becoming ever more difficult to obtain, the number of mortgages being approved will continue at a low level October 2008 was 52% down on October 2007 in the number of new home loans.Seema Shah of consultancy Capital Economics has forecast continuing subdued activity.

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# posted by David @ 5:14 AM