Annually, prices were up by 4.8% – the lowest annual increase seen this year as the slowdown in house prices continues [see graph 1]. However a crash remains highly unlikely according to the NAEA, who are optimistic that the usual New Year upturn will lead to a more positive market in early 2005, with over 50% of agents expecting activity to pick up in January and a further 44% anticipating a revival by Easter.
The number of houses available remained high last month whilst the number of buyers dropped again to its lowest figure this year. This shows that supply is beginning to exceed demand as new properties continue to come on to the market while buyers are still playing a game of wait and see.
New instructions remain strong with sellers eager to sell their property at its maximum price. However many estate agents currently report that business is slower with a lower number of transactions than earlier in the year; partly due to the expected seasonal slowdown approaching Christmas but also as a result of the slowdown in the market.
Reflecting the balance of the market in favour of buyers, the average percentage discount achieved off asking prices was 4.9% compared to just 2.8% six months ago.
After dropping to very low levels earlier this year, the percentage of first time buyers in the market rose again last month to 17.1%, indicating that as prices drop slightly, new buyers are finding it easier to get on the property ladder.
Richard Hair, President of the NAEA, comments: “The market is now in its sixth month of this price correction and, although annual increases are at their lowest rate for many years, the gloom merchants are going to be left disappointed that the slowdown will not morph into a crash. The market is inevitably slow at this time of the year as both buyers and sellers have their minds on other matters over Christmas and New Year. However we remain optimistic that the traditional New Year revitalisation will perk up the market and we are expecting an upturn as buyers return and prices become stronger.
“Currently, many buyers are continuing to sit on the fence in the anticipation of further drops in prices. Sensible asking prices are key to a successful sale as those who are buying are finding that they are in a stronger position to negotiate with the market in their favour.”