Hometrack’s latest monthly survey of over 5,100 agents and surveyors shows that demand for housing in July dropped by -1.3% triggering the first fall in prices for 15 months.
The decline in demand is in part seasonal but the underlying trend for the last 5 months has been downwards. Concerns over the economy and talk of impending spending cuts have taken their toll on market confidence and levels of demand.
In contrast, the supply of homes for sale continues to increase - rising by 3.6% in July. The abolition of Home Information Packs (HIPS) and firmer pricing has encouraged many would-be sellers to dip their toe into the property market.
The change in market conditions has seen the average time on the market rise to 8.7 weeks - up from 8.4 weeks in June. The average time on the market has returned to August 2009 levels.
The proportion of the asking price being achieved has dropped to 94% from 94.3% in June and looks set to decline further as pricing comes under pressure.
The one positive from the survey is that the volume of sales agreed increased by 3.7%. Despite this agents are marking prices lower as they see rising supply and faltering demand putting prices under downward pressure over the remainder of 2010.
Commenting Richard Donnell, director of research at Hometrack, said: "In July prices were down across 12% of the country. This is an increase on recent months but still well down on the extent of price falls seen in 2008. There were localised price falls in previous years but the absolute level of monthly price falls was much smaller than in 2008.
"The proportion of the asking price has bounced back over the last 12 months from a low of 88% in February 2009 to over 94%. However in July the measure fell slightly. The figure stood at 94% this month compared to 94.3% in June."
