Prices drift lower despite rising demand
Year-on-year house price inflation is currently registering the lowest rate of price falls for two years.
In the north of the country there are signs that prices are firming with a steady decline in the size of the gap between asking and achieved prices over the last six months.
Re-pricing older stock to a level where sales can take place has been a key trend over summer. As a result October saw a 9.2% increase in the number of sales agreed. Double digit growth in sales was seen in the midlands and Wales.
Overall demand for housing remains subdued. The modest headline increase in demand nationally was largely driven by a 3.9% jump in new buyer registrations in London. This follows four consecutive months (June – September) of falling demand in the capital.
The time to sell indicator remains largely unchanged despite a slowing in price falls over the last two years. The time on the market over October averaged around 12 weeks in the midlands and northern regions, eight weeks in the south and less than six in London.
While the UK has moved back into economic growth and out of recession in the third quarter of 2012, the housing market will not see a sustainable recovery until there is sustained growth in the economy and real household incomes.
Richard Donnell, director of research at Hometrack – the property analytics business – said: “House prices continued to drift lower in October, falling by -0.1%. This is despite a 9.2% jump in sales agreed and a small increase in new buyers registering with agents over the month.
“However, taking a broader view of the market, year-on-year house price inflation is currently registering the lowest level of price falls for two years (currently -0.4%). This is down to a strong spring market in 2012 and a steady firming in underlying pricing levels in the north of the country.”