New sellers bringing their homes to the market are now pushing average asking prices up by 3.1% this month according to Rightmove.

This puts the average asking price [1] in the UK at £230,030. The year on year average also saw a slight rise of 0.3%.

Rightmove are also calling this a 'three tier' market, with at one end a 'low loan to value elite' and at the other 'bargain hunting bottom feeders' both getting the mortgage deals. But in the middle the 'average buyer' is being locked out of the market.

But whatever these sellers are asking for the projected dearth of mortgage lending and associated lack of real demand (not dreams) will almost certainly see these fall in the following months. This could well be accelerated by public sector cuts and inflation while employers look to freeze or decrease wages. What will hold asking prices up is the sellers' need to pay off debt, at least until it becomes a forced sale.

"Any hopes that transaction volumes may be on the springboard preparing to return to historic norms will have been dashed by lenders' predictions that 2011 lending volumes will match 2010's dire levels. 'Mr Average' will be left out in the cold in the buying and selling game unless the beneficiary of a hereditary hand-out. The current subdued market volumes are set to be the new norm unless the seemingly never ending discussions between Government and mortgage lenders find some way of increasing 'Mr Average's' access to lower deposit mortgages without pricing them out of the market " said director of Rightmove Miles Shipside.

But in reality it is not the lack of mortgage funding that is the problem, it was the past free flow of credit that got us here. The only way out now is the resetting of house prices to fit the average person's financial circumstances within the new more stringent lending rules. With asking prices where they are this message has obviously not got through to both sellers and estate agents.

For many people this means a life renting and no prospect of ever owning their own home. For others it means renting for many, many years before scraping together the required deposit.

The term 'accidental landlord' has also entered our lexicon during these last few years but a new term is emerging, that of the 'limbo-landlord'. The limbo-landlord is someone who has to keep their original house rented out as they move up through a succession of rented houses themselves.

But as many will know the standard Assured Shorthold Tenancy (AST) does not give the tenant that much protection. Especially if the landlord has that house repossessed.

What tenants should be looking at is possibly adding a property lease option into the deal. At least they then get the first option to buy the property at a pre-agreed price later on.


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