House sellers warned punchy pricing raises risk of homes seen as poorer value
House sellers are being warned of the risks of punchy pricing, as figures show a "surprisingly modest" increase in the price tags of homes coming to market in February.
Across England and Wales, asking prices increased by 2% month-on-month in February - the smallest uplift seen for this time of year since February 2009 - property website Rightmove said.
Rightmove said the slower pace of price growth means homes priced too ambitiously by sellers are at a bigger risk of standing out as poorer value and putting buyers off.
In a market where prices are rising quickly, a property being over-priced is less noticeable as the price tags on other homes will catch up with it before too long.
Three-quarters (75%) of estate agents surveyed by Rightmove reported their local market as being "price sensitive", with buyers reluctant to make enquiries if a property is priced too highly by more than a few per cent.
Despite being relatively small compared with previous years, the latest asking price increase is still a £5,986 jump compared with January, making the typical price tag on a home in February £306,231.
Rightmove said that despite the "surprisingly modest 2%" increase, demand for homes remains strong. The website recorded over 131 million visits in January, three million higher than a year earlier and a record high for this time of year.
Miles Shipside, director of Rightmove, said that at a time when the pace of inflation is picking up and the price of goods generally is rising at a faster rate, the increase in property prices is slowing.
He said: "Perhaps we're approaching the territory where many buyers are unable or unwilling to pay what sellers are asking, given the negative combination of rises in the cost of living, tighter lending criteria, and a dose of Brexit uncertainty."
Asking prices are 2.3% higher than a year ago - the lowest annual rate of increase since April 2013 - a time when the typical price tag on a home was nearly £60,000 lower than now.
Mr Shipside continued: " With the annual rate of price increase now at 2.3% a property that is over-priced by more than 5% will have to wait more than two years for the market to catch up with it."
Some house sellers may plan to start with an ambitious price tag, thinking they can slash it later if they get little interest.
But Mr Shipside said Rightmove's tracking data has found that homes need to substantially out-perform the level of interest in similar properties in the same area during the first three weeks of going on the market to minimise the risk of being left on the shelf.
He said: "Over-pricing loses you that vital initial interest and impetus, and buyers often have reservations about a property that has not sold as quickly as others or has had a price reduction."
Looking around the country, no region saw a month-on-month fall in asking prices in February.
Wales saw the biggest jump, with an 8.1% month-on-month increase taking the average asking price to £177,556 - up £13,265 on January.
The South East of England saw the weakest monthly increase, with a 0% change leaving the average asking price at £404,951.
Regions where asking prices are already relatively high saw smaller monthly increases in asking prices than some less expensive areas.
London and East Anglia recorded increases of 2.6% and 1.5% respectively and the North East of England and Yorkshire and Humberside saw increases of 4.1% and 3.5% respectively.