UK property market prices falling as downward trend kicks in, latest figures show

The Hometrack monthly report says a downward price trend is underway following a 0.1% fall in prices in July. August is traditionally a weak month for British house prices, with many buyers on holiday, and Hometrack’s data are not seasonally adjusted.
 
But even so the index also shows that property prices are now just 1.5% higher than a year ago, the smallest annual gain since March.
 
‘The housing market is in the process of a modest re-pricing that is likely to run for the next six to 12 months. This follows a period of 18 months over which house prices have firmed rapidly on the back of a potent mix of rising demand and a chronic lack of housing for sale,’ said Hometrack’s director of research Richard Donnell.
 
The figures show a different trend from official Land Registry price data published at the end of last week that showed house prices were 6.7% higher in July than a year ago after a 0.4% monthly rise. But this data based on actual sales tends to lag behind the industry data.
 
Hometrack’s survey is based on estate agents’ and surveyors’ estimates of realistic prices, and has typically shown smaller rises and falls than official data and figures from major British mortgage lenders Halifax and Nationwide.
 
According to Hometrack the August decline was driven by a fall in the number of people looking to move home, with demand for housing dropping for the second month in a row by 2.2%.
 
At the same time, the number of new properties on the market increased, with estate agents reporting a 2.4% jump in the number of homes they had on their books.
 
The change in conditions has seen the average time a property takes to sell increase to 8.9 weeks, the highest level for more than a year, Hometrack said. Sellers are also getting a lower proportion of their asking price, dropping to 93.5% from 94% in July.
 
‘The unmistakable fact is that the availability of homes for sale has improved markedly and this has reduced the support for house prices provided by the scarcity of housing for sale over 2009 and early 2010. This comes at a time when there is growing weakness on the demand side, a weakness which represents more than just a seasonal blip,’ explained Donnell.
 
He expects further modest price falls in the coming months. But there were some reasons to be cheerful among the otherwise bleak figures, with the number of sales agreed modestly rising by 0.8% during the month.