House prices have now been falling for 14 months and show little sign of imminent recovery. The national average house price now stands at £161,000, down from a peak of £167,700 in June last year and down over 3.7% in the past 12 months.
Activity in the market has increased by 4.1% this month, (3% in July’s survey), suggesting that some confidence has returned. However, the number of new buyers coming on to the market has continued to fall, by -0.5% (-0.3% in July’s survey). With fewer buyers and a continued increase in the number of properties coming on to the market of 2.1% (3.3% in July’s survey), the resulting oversupply means that it is still a buyers’ market and prices will inevitably decrease again in the coming months.
Sales price as a percentage of asking price has remained at 93.4% this month. This indicates that buyers are still negotiating large discounts of over 6%, although their bargaining power has not improved.
It now takes 8 weeks to sell a house, a fractional increase from 7.8 weeks in July’s survey, but up considerably from the 5.3 weeks it took to sell in August last year. This can be attributed to the fact that buyers have more choice and therefore take longer to sell. Despite this, the number of viewings per sale has fallen to 12.1 (12.5 in July’s survey).
Of all the counties, just three have seen price rises this month. 21 have remained static and 33 have seen price falls. The counties reporting price rises are Leicestershire (0.8%), East London (0.1%) and West Midlands (0.1%). Berkshire and Cambridgeshire are among the counties that remained static this month. The counties reporting the worst price falls this month are Avon (-0.6%), Buckinghamshire (-0.5%) and Bedfordshire (-0.5%). West Sussex and Surrey were among counties reporting falls of -0.4% this month.
Of the cities, two have seen price rises, 35 have remained static and 17 have seen price falls. The cities reporting price rises are Leicester (1.7%) and Liverpool (0.1%). Blackpool, Bournemouth and Bradford are among the cities remaining static. The cities reporting the largest falls this month are Bath (-2.0%), Milton Keynes (-1.7%), Guildford (-1.7%), Swansea (-0.9%) and Cheltenham (-0.9%).
John Wriglesworth, Hometrack’s housing economist, commented: “House prices have failed to respond to the recent interest rate cut, and continue their stagnating negative trend, which has now gone on for well over a year. While transactions have picked up a little this month, a further reduction in new buyers and a further increase in supply suggests no prospect of price rises in the near future. It is a buyer’s market with discounts achieved as a percentage of asking price typically being well over 6%, equating to £12,000 savings on an average priced property.
“It is now taking an average of nearly two months to sell a house compared with just over five weeks in August last year, and we are forecasting only 3% inflation over the next year [2006]. While there is still little chance of a crash, another housing boom is unlikely for at least the next three years. Over the short term sluggish but stable is the most likely scenario.”
