After a year’s steady decline in house
price inflation since May’s peak of 2.6%, this is further evidence that the property boom is truly at an end.
The slowdown has been particularly marked in the South East, where price falls have
been widespread – 24 counties reported price falls. The counties reporting the
highest falls were Surrey (-0.7%), Hampshire (-0.6%), Berkshire (-0.5%), East
Sussex (-0.4%), and Essex (-0.4%).
Meanwhile, 20 counties reported moderate price rises. The highest rises occurred in
Staffordshire (0.5%), South Wales (0.4%), North Wales (0.4%), Tyne and Wear
(0.4%) and Mid Wales (0.3%). Thirteen counties reported no price changes.
The average house price of the ten counties with the highest price rises is
£98,760 whereas the average house price of the ten counties with the highest
price falls is £179,360. The average house price for the country as a whole is
£135,200.
In a repeat of last month, the housing market has shown signs of embedded
weakness in the South and continued growth in the North. From Gloucester in the
West, to Kings Linn in the East, a curtain cuts the country with price rises almost
exclusively above the line and falls below it. However, prospects for the North are
worsening. Whilst homes remain more affordable there, the market is slowing, with
one quarter of the northern counties reporting stagnant prices this month and the
others slowing sharply. The gloom continues for the South, with all but one county
seeing a fall in prices over the month.
While the number of new properties listed grew by 6%, the number of new
buyers rose by less than 2% (see Table 1 in Notes to Editors). This means that
Hometrack’s unique National Demand Index™ reveals a further decline in demand
relative to supply (see Graph 2 in Notes to Editors). Levels of excess demand are
continuing to fall.
Prices achieved as a percentage of asking price fell again for the eleventh month in
succession to 94.4%, the lowest for over two years, although the fall this month was
slight. On average, it is currently taking over 5
weeks to sell a home with an average of 12 viewings per sale. This is well down on
the 2.8 weeks to sell and 9.0 viewings per sale recorded at the height of the boom
in May last year. These facts point to little improvement in house prices in the short
term.
John Wriglesworth, hometrack’s housing economist, comments: “National house
prices have fallen for the second month in a row and the North-South divide
continues. While the stagnation is likely to persist over the next few months, there
are clear signs that the market is bottoming out. Price falls in the South have stopped
increasing whereas price rises in the North are showing signs of easing. With the Iraqi
war over, there are some signs of increasing housing activity which will help support
house prices in the latter half of the year. We continue to forecast 4% national house
price rises for this year for the country as a whole.”
