House prices fall for fourth consecutive month
AVERAGE PROPERTY PRICE £197,633
AVERAGE MONTHLY CHANGE – 1.60%
AVERAGE ANNUAL CHANGE + 7.95%
House prices were on average 1.6% lower than the previous month and, further confirming the slowdown in the market, the annual increase in house prices was down to 7.95% – its lowest level so far this year [see graph 1]. However prices are still historically high and unachievable for many looking to get on to the property ladder – the percentage of first time buyers falling yet again to just 8.9% last month.
All monitors of activity show that there has been an increase in the number of homes for sale but a decrease in the number of buyers. New registrations fell by 20% but new instructions and the number of houses available remained at quite high levels. Agents across the country support these figures with reports of plenty of new instructions on the books but a lack of buyers as they wait to see what is happening in the market. With a shortage of buyers, transactions were down on previous months [see graph 3]. There were fewer sales agreed, compared to both the previous month and usual activity at this time of the year, and more viewings before a sale.
Agents also report that only those properties that are realistically priced are selling. This is backed up by the average discount achieved from asking prices, which has been rising for the past six months and now, at 5.5%, is at its highest level for the last two years [see graph 4]. This demonstrates the continuing readjustment of prices and the shifting balance of the market as it turns in favour of buyers.
Strong rental market
However, increasing numbers of disillusioned buyers are deciding to become tenants and the rental market reported strong activity. The number of vacant properties fell and average rents increased by around 1.9% on the last month and 4.9% annually.
Richard Hair, President of the NAEA, comments: “The market is clearly now showing signs of the correction that we have been predicting all year. This month’s reports from the estate agents at the frontline reveal that prices are indeed continuing to fall slightly and buyers are adopting a ‘wait-and-see’ attitude. Nevertheless there are plenty of new instructions and, providing vendors are realistic in their asking prices, we should see the buyers start to move for these homes once they realise that a crash is a very unlikely prospect.”