While the government’s Funding for Lending initiative looks set to support a modest increase in mortgage lending an uncertain economic outlook, together with affordability pressures, will continue to act as a drag on housing market activity the analytics business predicts.
Pricing will remain under slow downward pressure but a tightening in supply will limit the scale of price falls in the short term.
Meanwhile demand has fallen for the last four consecutive months with September registering the largest fall at -3.6%. Demand in September fell across all regions. This is in contrast to the start of the year when between February and May the number of people registering with agents rose by 25%.
Slowing demand is typically followed by tightening supply. September saw the first monthly decline in supply (-0.9%) following seven months of growth.
No region registered price increases in September. House prices were static in London and the south west and fell in all other regions.
The percentage of the asking price achieved remained unchanged at 93%. The greatest gap between asking and achieved prices continues to be in northern regions (8.1%) but the gap is starting to widen in London and the south.
Nationally the time on the market has increased to 9.9 weeks. In the south east the figure has risen by 10% (to 8.8 weeks) since May. The time on the market for three regions - east Midlands (13.3 weeks); north east (12.6 weeks); and north west (12.4 weeks) - now stands at over three months.
Richard Donnell, director of research at Hometrack, said: “House prices fell for the third month in a row on the back of weakening demand, a fall in sales agreed and a re-pricing of unsold stock.
“While the government’s Funding for Lending scheme is likely to support a modest increase in mortgage lending, the uncertain economic outlook, together with affordability pressures will continue to act as a drag on housing market activity.
“Pricing will remain under slow downward pressure but, the tightening of supply will limit the scale of price falls in the short term.
“The last four surveys have reported a decline in housing demand with September registering the largest fall at -3.6%. The legacy of summer, which saw a slowdown in demand driven by seasonal factors compounded by the Olympics, has continued into September. This has added further to low consumer confidence which has been a feature of the housing market for some considerable time. While the level of price changes varied across the country, demand over the month fell across all regions.
“This is in sharp contrast to the start of the year when between February and May demand rose by 25%. It is a pattern that has been seen over the past two years.
“A period of slowing demand is typically followed by a tightening in supply as the majority of buyers are also sellers. September saw the first monthly decline in supply (-0.9%) after seven consecutive months of growth.
“A tightening in supply will limit the downward pressure on prices in the short term, although any fall in the volume of sales agreed will see agents looking to re-price the stock of housing on their books to ensure sales levels are maintained. Some agents have reported that this re-pricing process of older stock is already underway.”
The survey shows that overall prices remained static across the majority of the country (70%) in September. Price changes were concentrated at the margins with 6% of the country registering higher prices compared to 24% of areas recording price falls.
Overall, no region registered price increases in September. House prices were static in London and the south west while they fell in all other regions over the month - by up to -0.3% in the north west.
The percentage of the asking price achieved remained unchanged in September at 93%. The greatest gap between asking and achieved prices continues to be in northern regions (8.1%). The gap is starting to widen in London and southern regions off a high base and stands at 6% in London and 6.5% in southern regions.
Weaker demand has impacted the average time on the market. This is the most definitive indicator of the health of the market – at both a national and local level. The time on the market has increased to 9.9 weeks from 9.5 weeks in August. In London the time on the market has been rising for the last few months but still stands at just 5.8 weeks. In the south east the measure has jumped by 10% to 8.8 weeks since May. The time on the market for three regions - east Midlands (13.3 weeks); north east (12.6 weeks); and north west (12.4 weeks) - now stands at over three months.
Donnell added: “Looking ahead to the remainder of the year, levels of market activity are set to remain subdued with house prices continuing to drift slowly lower. However supply will continue to tighten, acting as a support to and limiting the scale of, price falls.”
