A scarcity of housing for sale has been a key feature of the market in recent months but while supply has been growing it has failed to keep pace with demand.
However, the latest monthly report from HomeTrack shows that this trend reversed in July with a 2.4% increase in supply on the back of improving market sentiment.
House prices grew 0.3% in July, down on the 0.4% growth in each of the previous two months.
New buyer registrations are slowing as seasonal factors kick in. The data shows that demand for housing grew 1% in July, down from 1.6% in June and 2.5% in May.
The coverage of price rises fell marginally over July with 29% of markets registering price increases, down from 31% in June.
Other market indicators are still improving on the back of continued price rises and rising sales volumes.
The average time on the market has fallen to 8.2 weeks, the lowest for six years as a result of rapidly shortening sales periods in London at 3.8 weeks and the South East at 6.4 weeks.
The HomeTrack report also says that vendors across the country are benefiting from a lower discount on asking price which currently averages 5.6%, another measure that is back to 2007 levels. Firmer pricing is drawing vendors into the market.
‘Looking ahead we expect demand to continue to slow over the rest of the summer as seasonal factors play their part. The supply of homes for sale is likely to expand further as vendors look to benefit from improving market conditions and expectations of a renewed pick up in demand in the autumn,’ said a spokesman.
‘Whether 2013 turns out to be the year with the highest increase in house prices since the start of the downturn will depend on the level to which new buyers enter the market in the autumn,’ he added.
The report points out that the gap between asking and achieved prices has been falling across the country and is narrowing most rapidly in London and Southern England. Improvements in underlying pricing levels are now feeding through in the northern and midlands regions.
It also says that the balance between supply and demand leads underlying house price changes by three months. The supply/demand balance has opened up in the last four months pointing to price appreciation. July saw the first time the balance has started to shift into negative territory.
