Despite sluggish sales, UK house prices are still around five times that of earnings
House buyers and sellers face a stand-off in the coming months due to an opinion gap about how realistic prices are in the tough economy, a study has suggested.
The mis-match in views could lead to sales stalling further in a market which is already seen as difficult and patchy, property search website Rightmove found.
Half of people planning to buy a home in the next year feel prices in their area are still above what is "fair and reasonable", despite the weakness of the market, researchers found. But only a third of people who are trying to sell a home hold the same view, and 56% of them said their biggest concern is receiving an offer they consider to be "sensible".
Despite sluggish sales, UK house prices are still around five times that of earnings, compared with the longer-term average over the last 30 years which is closer to four times, according to research from Nationwide.
Rents have soared as people unable to get on the property ladder because they cannot raise a deposit or meet lenders' toughened criteria have remained in the rental sector.
People living in London, where prices have remained relatively strong due to heavy overseas buyer interest were the most likely to believe prices are higher than what is fair, with 65% of people saying this. They were closely followed by people in the South East, where 56% of people hold this opinion.
Those living in Northern Ireland, where house prices have declined sharply following a period of rocketing prices before the financial crisis, were the least likely to believe they are unreasonable, with just a fifth of people agreeing this.
Despite the differing opinions, those surveyed tended to believe that house prices will not drop as a result. Seven out of 10 people out of nearly 40,000 home movers in the UK-wide study conducted last month said they expect house prices to be the same or higher in a year's time while only 24% thought prices will be lower. A fifth of those who thought prices are set to rise said that this will be driven by "overpricing" by estate agents and sellers.
Miles Shipside, director of Rightmove said: "Unless both parties are able to bridge the price gap, then a stand-off situation ensues leading to lower numbers of successful sales. Naturally, sellers have an interest in standing their ground in order to achieve the best price but in the current housing market, where sellers outnumber successful buyers by around two to one, sellers need to lower the price or increase the perception of value to avoid being outflanked by their competition."
Some 32% of people in Scotland thought prices are above what is fair, as did 43% of people in Wales. In England, people in the East Midlands were the least likely to think that prices are too high, with 38% holding this opinion.