It’s well known that in UK real estate, local real estate markets are falling because individuals and real estate agents may have inflated views of property values. With sales volumes that can be up to 50% lower than the average, the average price of homes for sale is definitely trending downward. Another factor that’s contributing to this growing downward tendency is that many sellers tend to have an inflated idea of what their properties are worth and for this reason, they reject larger numbers of offers. This is caused by a discrepancy that can range up to 30% between buyer and seller. A seller who’s offering £100,000 for a UK real estate property and receives offers in the range of £70,000 is better likely to reject them.

Sellers Are A Major Part of the Problem

Owners aren’t listening when real estate brokers tell them their property value has fallen. In fact, property values in the present market can decline as much as 20% annually. One expert in real estate services places the blame firmly on the sellers: “As a result they [sellers] are unwilling to accept agent advice on appropriate asking prices or offers. Consequently, many properties are withdrawn from the market or remain unsold for long periods, producing an unprecedented low number of transactions. Unless their [sellers] properties are absolutely outstanding it is essential that they [sellers] adopt a realistic attitude and listen to advice if they want to achieve a sale.”

Costly Real Estate is Suffering Too

Another shocking aspect of this trend of UK real estate is that even high-end properties designated as “super prime” are not immune. A super prime property is one worth more than ten million pounds. Every real estate agent knows that despite foreign investment in these properties, the prices are still dropping. Rental prices are also dropping as more and more super prime properties flood the rental market.

Lenders Are Partially to Blame

Add to this the fact that mortgage rates are rising, despite government efforts to support failing banks. Bank of England recently raised rates from .2% to .5% despite interest rates dropping – meaning there’s no benefit to consumers. The banks circle the wagons, each claiming that the rates rise because all the other banks raise their rates. The same group behavior doesn’t take place when some rates get lower. Whether or not this is true, it’s still bad news for real estate in the U.K. And it’s even hurting news for consumers who are seriously looking to buy UK real estate.