Despite falling levels of demand and declining sales volumes, a lack of 'saleable' homes coming to the market is acting as a support to prices. However year on year growth has slipped back to 5.0 per cent from a recent high of 6.8 per cent in April 2007.
The survey showed that achievable prices moved lower in 4 per cent of postcode areas while price rises were limited to just 8.6 per cent of the country, the lowest level since November 2005.
While there is evidence that asking prices have slipped back in some markets over recent weeks, achievable prices remained unchanged across the vast majority of the market.
Richard Donnell, director of research at Hometrack said: “Turmoil in the financial markets has created a period of inertia in the housing market with buyers and sellers unwilling to commit until the outlook becomes clearer. As a result, agents reported a 2.7 per cent drop in the number of sales agreed over September, following a 1 per cent fall in August.”
Similarly levels of demand from buyers have also fallen. The volume of applicants registering with agents fell by -4.5 per cent over the month.
Donnell continued: “This is the third month in a row that applicant numbers have fallen with an 11 per cent decline in demand since June. This level of change in demand is not unusual around Christmas and the New Year but the last time there were three consecutive monthly falls in demand was in the second half of 2004. This was the last time that higher interest rates and weaker market confidence impacted on the housing market.”
Three years ago the Hometrack survey picked up small falls in achievable prices as the market slowed rapidly off a high base. The modest monthly price falls recorded in 2004 and 2005 were exacerbated by a sizeable increase in the supply of property coming to the market for sale. There was a 12 per cent increase in listings between June and September 2004.
But, as Donnell pointed out: “An important difference between now and 2004 is that today there are no signs of any increase in new supply. If anything there appears to be a tightening in supply in the face of greater uncertainty. The latest results show that there has been no increase in the supply of homes for sale between June and September 2007. Indeed, many of the homes put on the market in the early summer, in advance of the introduction of Home Information Packs, may well be withdrawn by those who do not need to sell and who were looking to take advantage of what were then stronger market conditions.
“While demand and sales volumes look set to remain weak over the rest of the year, a lack of saleable properties look likely to support achievable prices. In contrast weaker demand is likely to impact most on asking prices which tend to bear the brunt of any decline in confidence. The latest survey shows that the proportion of the asking price being achieved fell for the fourth month in a row and now stands at 94.8 per cent.”
