Money News
House prices grew by 0.6% in May, according to the latest nationwide housing market survey from Hometrack, the property website. That's marginally down on the 0.7% seen in April. Meanwhile, year-on-year prices also marginally fell, from 6.8% to 6.7%.
Hometrack says its latest survey shows that the market is starting to be tested on three fronts, namely supply, demand and sales volumes. Over the month for example, there was no increase in the number of new buyers registering with agents. This could in part be explained by increasing resistance to pricing levels, together with widespread expectations of an interest rate increase in May and the threat of more to follow. Signs of softening demand are consistent with a slowdown in the volume of sales. Indeed, sales levels grew by just 4.3% over May compared to a 9.6% increase in April.
Against this background of weakening demand and slower sales there continues to be an increase in the volume of supply coming to the market. The survey reveals a 6% increase in properties coming to the market over May, up from a 5.7% increase in April and a 4.7% rise in March.
The growth in supply is a result of vendors, primarily in London and the South East, looking to cash in on strong market conditions. In addition, there were pre-emptive moves to avoid the cost of Home Information Packs - which have now been delayed and scaled down - to take into consideration.
London, which has been the engine for house price growth over the last 18 months, was the region that registered the largest increase in new properties coming to the market over the month (8.8%). This continues last month's trend and means that the supply of homes coming to the market has increased by 14.5% over the last 2 months. This is in stark contrast to the 1.3% increase over the same two month period last year. Much of this supply is likely to be fully priced as buyers look to take advantage of the strong market conditions to cash in and fund their next move.
As for the rest of the country the rate of annual growth in all regions is well below that seen in London. The South East has witnessed the second highest rate of growth at 7.2%, followed by East Anglia where values are presently rising at 5.5% per annum.
Growth continues to be subdued across all other regions where there remains a decent supply of housing for sale and where the recent increases in interest rates have had a more immediate impact on demand.
However, even in the South East, where growth has been buoyant recently, the month on month rate of growth slipped back from 0.9% in April to 0.6% in May. The same occurred in East Anglia with growth falling back from 0.6% to 0.3% over the same period.
29 May 2007 © Moneyextra.com
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