Commenting, the housing market specialist and chair of Acadametrics, said: “Given the number of policy changes that have impacted to varying degrees upon the housing market in recent months, it remains difficult to tease out what is really happening in terms of underlying trends.
“Confidence remains weak as does the supply of credit and the Bank of England’s recent Financial Stability Review (June) points up the funding difficulties being faced by lenders. Acadametrics has now reported price falls over the last four months, totalling 2.4% or just over £5,250.
“Apart from the period March 2008 to April 2009, this is the longest running fall for some years.
“There has been much debate about a double dip recession in the housing market, paralleling what might happen in the wider economy. Without doubt those risks exist and the pattern of falls we report is not dissimilar so far to the early months of the last major re-adjustment.
“Much turns on the economy, unemployment and interest rates where the Bank has been sending ”lower for longer” messages in terms of rates, even though inflation has gathered pace (along with what happens in the USA).
“With the possibility of rate rises later in the year together with the scaling back of support for home owners in difficulty, we could see pressures begin to build in the market that might give further momentum to price falls.
“For the present, the outlook for the housing market remains negative. However, with continued demographic pressures (and at least 1 million first time buyers waiting to enter the market when conditions allow) and much reduced housing supply, there is a real possibility of a strong recovery in prices once conditions allow demand to become effective.
“So a limited dip might be followed by a sharp rise but much turns on the supply and price of mortgages. That said, it is hard to see how, despite new entrants and government pressure on lenders to increase lending, prices will surge.
“Whilst mortgage supply remains restricted, price competition is dampened and, given the shift to greater reliance on retail funding, mortgages will inevitably cost more anyway, providing a further dampener.
“In conclusion, the outlook remains challenging.”
