Falling demand marks change for house prices
This is in contrast to the first half of the year when demand had been steadily rising, according to the latest house price survey from Hometrack.
On the supply side, the number of new properties coming to the market in the 9 months up until
September, grew by 22%, compared to an 11% increase in demand.
However Hometrack believes the continuing economic uncertainty both at home and in the Eurozone is likely to dent consumer confidence further. This can only result in demand slipping further over the final months of the year.
Hometrack believes that as the gap between supply and demand widens, we are likely to see an acceleration in the level of price falls as we head towards the end of the year.
The percentage of asking price being achieved is weakest in northern England where achieved prices are around 9% lower than asking prices. In the short-term this is likely to result in above average price falls in the north of the country.
Prices have fallen for 15 consecutive months (since July 2010). The level of price falls was highest over the second half of 2010 averaging -0.5% per month compared to -0.1% over the last 6 months.
London – where growth has averaged +0.2% per month – continues to act as a support to prices.
The time on the market remains highest in the north, midlands and Wales. Here houses are averaging 11 weeks on the market before going under offer, compared to 8 weeks in southern England and just over 6 weeks in London.
Sales volumes were up by 2% over September, but weaker demand combined with less attractive housing stock is likely to result in lower sales volumes. This combined with price reductions suggests the start of a new phase of re-pricing across the market.
Commenting on the latest monthly national housing survey, Richard Donnell, director of research at Hometrack, said: “The September survey shows a clear shift in the balance between supply and demand in the housing market, with the number of people looking to buy falling for the second month in a row. This is in contrast to the first half of the year, when demand had been steadily rising.
“On the supply side, the number of new properties coming to the market in the 9 months up until September grew at twice the rate of demand (supply grew by 22%, compared to an 11% increase in demand).
“We expect demand to continue to slip back over the final few months of the year. This will compound the gap between supply and demand and suggests a likely acceleration in the level of monthly price falls over the final quarter of the year.
“The wider the gap between asking and achieved [prices], the less slack there is to absorb weaker demand. In the short-term we see above average price falls registering in the housing markets in the north of the country.”