Over the last seven months house price inflation has steadily reduced from a peak of +0.9 per cent in February. Hometrack said excess supply of properties in the market has increased sharply this month with the number of buyers registered with estate agents falling by 5 per cent , following falls of 4 per cent in the previous two months.
Hometrack’s National Demand Index is now recording an increase in supply relative to demand for the fourth month running. The excess supply points to further house price falls in the coming months.
Hometrack has reduced its 2004 house price inflation forecast to 3 per cent (previously 5 per cent), and predicts 0 per cent house price changes for 2005.
Agreed sales also fell by over 5 per cent this month (-2 per cent in August’s survey) and average sales prices achieved, as a percentage of asking price, fell for the fifth month in succession to 94.5 per cent – the lowest for well over a year.
Average time taken to sell has risen to 5.8 weeks (August’s survey reported 5.3 weeks, July’s survey 4.8 weeks) and the number of viewings has risen to 11.4 per sale (August’s survey reported 11.1 viewings).
House price falls are spread across the whole country. Only five counties out of 57 reported price rises: Teeside (0.2 per cent), South Lincolnshire (0.1 per cent), Nottinghamshire (0.1 per cent), North Yorkshire (0.1 per cent) and North Wales (0.1 per cent).
John Wriglesworth, Hometrack’s housing economist, commented: "Rising interest rates and reducing consumer confidence in the future health of the housing market have taken their toll for the third month running. Falling numbers of buyers, relative to the number of properties for sale, are increasing excess supply in the market, suggesting more house price falls over the coming months. We have reduced our house price forecast for 2004 to 3 per cent and expect 0 per cent for 2005. The housing boom is now well and truly over.
"While prices are now expected to stagnate over the next 18 months, we still expect some months of price rises. We see the market bumping along a new equilibrium plateau. Interest rates are still at a historical low, unemployment is also very low and household incomes are rising strongly. Meanwhile lenders are falling over backwards to lend ever greater amounts of money relative to individual incomes. This suggests that the present high level of house prices can be maintained. We see no evidence pointing to a housing market crash over the coming year: stagnation or modest deflation depicts the future course for house prices."
