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Mortgage famine hitting home

Tuesday 24th June 2008

Britains property market is slowing as the "mortgage famine" takes hold, according to the latest Rightmove House Price Index.

The June version of the monthly market report indicates that there are now 15 properties on sale for every one potential buyer.

However, with lenders reluctant to approve mortgages, a spokesperson for the analyst suggests that homes may have to be priced cheaply in order to sell.

Miles Shipside, commercial director of Rightmove, says: "Lenders are trying not to lend right now and are just cherry-picking for profit."

He adds: "Run-of-the-mill homes that are not much different to others on the market have to stand out as bargain buys and badly presented homes have to be really cheap."

But distinctive properties may still find it easier to achieve a sale if they are able to stand out from the rest of the market, he concludes.

Mr Shipside suggests that the typical buyer is likely to now be looking to spend around ten per cent less than they would have done when the market was at its peak.

His assertion is broadly in line with a recent prediction from Halifax Bank of Scotland (HBOS).

In a trading update last week, HBOS forecasted a nine per cent slump in house prices over the coming year.

The financial services provider predicts that a third of its mortgages are to be repriced over the same period, either through restructuring of its portfolio or due to customers coming off of fixed-rate deals.

HBOS adds that 2008 as a whole is likely to see a slump of about 45 per cent in the total number of property transactions which take place.©

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