UK residential property prices down again a seasonal slowdown starts early

Average house values dropped 0.8% in November as the seasonal winter slowdown starts a month early, according to the latest data from Hometrack. This follows fall of 0.9% in October and 0.4% in September.
 
‘The seasonal slowdown in the housing market has kicked in a month early, with demand for housing falling at the fastest rate for 20 months,’ said Richard Donnell, director of research at Hometrack.
 
‘Concerns over the economic outlook on the back of recent spending cuts, together with widespread expectations that house prices are set for a period of retrenchment, are driving the continued weakness in demand. It is inevitable that this trend will continue as we move into the new year from both a seasonal and sentiment perspective,’ he added.
 
Demand for property fell 4.3% this month, the biggest monthly decline since January 2009. However, the number of homes on the market is also set to fall in coming months as vendors reduce asking prices or withdraw property from the market. Hometrack expects this to shore up prices in the second part of next year.
 
As the outlook has become uncertain, so the supply of homes coming to the market has begun to fall, the Hometrack report also shows. The number of properties for sale fell by 0.4% in November, the first time in nine months that the survey has registered a fall in supply.
 
Prices are set to remain under downward pressure but a tightening in supply means that by the end of 2011 prices are forecast to fall by 2%. ‘A continued reduction in the supply of homes for sale seems inevitable in the coming months as vendors either reduce asking prices or withdraw property from the market. We expect this to act as a support to pricing levels over the second part of 2011,’ added Donnell.
 
The latest figures from the Land Registry show that prices fell 0.8% in October, the largest monthly drop since February 2009 on the index that is based on actual sales.
 
At the same time mortgage approvals have reached a 19 month low as a result of weak consumer confidence, low wage increases and tough conditions imposed by lenders.
 
Eight regions in England and Wales experienced increases in their average property values over the last 12 months. The region with the highest annual price change is London with an increase of 7.6%. The East experienced the greatest monthly rise with an increase of 1%.
 
The region with the greatest annual price fall is the North East with a fall of 0.9%. While Yorkshire and the Humber experienced the most significant monthly price decrease, down 1.8%. ‘Data from the Land Registry provides further evidence of a modest slowdown in the housing market. Prices have now fallen for two consecutive months according to this series although it is worth bearing in mind that they are still somewhat higher than where they were a year ago,’ said Simon Rubinsohn, Royal Institution of Chartered Surveyors chief economist.
 
‘The latest numbers do show significant regional variation and the likelihood is the divergence in pricing between different parts of the country will become more marked over the coming year as public spending cuts begin to bite,’ he explained.