A scarcity of housing for sale has been a key feature of the market in recent months. While supply has been growing it has failed to keep pace with demand.
This trend reversed in July with a 2.4% increase in supply on the back of improving market sentiment.
New buyer registrations are slowing as seasonal factors kick in – demand for housing grew 1% in July, down from 1.6% in June and 2.5% in May.
The average time on the market has fallen to 8.2 weeks - the lowest for 6 years as a result of rapidly shortening sales periods in London (3.8 weeks) and the South East (6.4 weeks).
The survey also revealed 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.
Richard Donnell, director of research at Hometrack, said: “The latest survey shows overall housing market conditions continuing to improve with shortening sales periods and vendors achieving lower discounts on asking price.
“However, the rate of house price growth slowed slightly in July as a result of weakening demand as we enter the holiday season.
“The momentum generated over the last six months looks set to moderate in the short term with less upward pressure on prices.”
Looking ahead Hometrack said it expects 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.
Donnell said: “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.”
