Money News
Latest housing market data from housing intelligence business, Hometrack, shows house prices falling by 0.1% in October, the first price fall for 2 years. The small decline in October follows two months of zero growth with the annual rate of growth falling back to 4.4%. Average prices were down by between 0.1 and 0.2% across all regions except for the West Midlands where values remained unchanged.
Hometrack's director of research, Richard Donnell, says the fall in prices over October isn't unexpected. Indeed, after several months of weaker buyer confidence, falling levels of demand and declining sales volumes, prices were bound to be affected.
The latest survey shows that the areas registering above average house price falls over October, of between 0.3% and 0.5%, are largely concentrated in the higher value areas of London and the wider South East such as Central London and City (-0.5%), South West (-0.4%), Hampshire (-0.4%), Cambridgeshire (-0.3%) and Oxfordshire (-0.3%).
These areas have all registered very strong price rises over the last 2 years on the back of robust, equity fuelled demand and a lack of housing for sale. Coming off such a high base, these areas are the most sensitive to the current weakening in demand.
The recent Hometrack surveys show how a combination of higher interest rates and weaker confidence has impacted on the key market dynamics. Buyers have stepped back from the market and for the last 4 months there have been falling levels of demand.
There was a 6.4% fall in the number of buyers registering with agents over October, with new buyer registrations down 17% over the last four months. This, in turn has resulted in a decline in the numbers of sales being agreed which was down 4.8% in October.
The weakness in demand and market activity means that the average length of time a property is on the market is rising rapidly, up from a recent low of 5.8 weeks in May 2007 to the current 7.4 weeks in October.
This return to a buyer's market is taking its toll on asking prices and the proportion of the asking price being achieved. Nationally, agents report that buyers are achieving 94.3% of the asking price, down from 94.8% last month. History shows that the closer this indicator moves towards 94% and below then the greater the extent and scale of any falls in achievable prices.
"We expect further small price falls in the months ahead but these are likely to remain limited as there remains no evidence of any increase in the supply of homes for sale.
"If anything the current uncertainty appears to be resulting in a decline in the numbers of homes coming to the market which is likely to support underlying prices in the coming months," says Donnell.
29 October 2007 © Moneyextra.com
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