Hometrack house prices dip slightly

Sarah Davidson

August 28, 2012

The research firm said weaker demand and a re-pricing of housing still on agents books was behind the modest decline in house prices as agents and surveyors await a clearer sense of direction once the holidays period is over.

The main change recorded by this national survey of 1,500 agents and surveyors was an unseasonal increase in the number of sales agreed – up 6.5% – at a time in the year when sales volumes would tend to decline rather than rise.

Poor weather in June and early July depressed levels of market activity and this delayed demand has fed through into an unseasonal rise in sales, albeit off a low base.

This is consistent with recent reports of an increase in mortgage lending.

Richard Donnell, director of research at Hometrack, said: “Overall, the survey paints a picture of an uncertain market compounded by seasonal factors, a prolonged period of bad weather and the Olympics.

“This said, despite the general uncertainty, agents report that there are buyers in the market but that they remain cautious and highly price sensitive.

“Correctly priced property is selling within a reasonable time.”

Nationally demand fell for the third month in a row, by -1.3% in August, while supply continued to grow (0.8%) albeit at a slowing rate. The balance between housing demand and supply is widening suggesting further downward pressure on prices.

Demand is up by 10% over the year to date while supply has grown by 19%.

House prices were unchanged (0%) in London, while across all other regions prices fell at slower rate than in recent months. Prices rose across just 3.6% of the country while the extent of price falls slowed slightly in August with 27.1% of areas registering prices falls.

In London prices were, on average, unchanged over August. This is the first time in 2012 that prices in London have not grown. Despite this, the time on market – which in London is low by national standards – stands at just 5.4 weeks.

Across the rest of the country the level of price falls slowed in August with no regions reporting a price fall in excess of -0.2%. While the time on the market indicator has edged up slowly in recent months to stand at 9.5 weeks, it has grown most sharply in regions in the north of the country where the indicator averages 12 weeks – a return to the highs of March 2011.

Some of the slowest markets have over recent years been in the northern regions of the country. Agents working in these areas have had to be particularly competitive to ensure that sales have taken place.

As a result, these regions have seen some of the largest price adjustments over the last few years.

In southern England where prices firmed the most over recent years, weaker demand is now putting more pressure on agreed prices and as a result, the percentage of asking price being achieved is softening.

Donnell added: “Overall, the market remains in a fragile state. Thin volumes and a sluggish market, compounded by seasonal and one-off events, is reflected in the volatility of this month’s indicators.

“As the supply demand balance weakens, we expect to see slow downward pressure on prices over the remainder of 2012.”

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