The number of housebuyers on the books of estate agents fell by 13.6% last month, figures released by the National Association of Estate Agents show.
The NAEA's monthly survey of almost 10,000 agents across the country also revealed that new applicant enquiries fell 24.1% over the last three months, as homebuyers demonstrate an unwillingness to enter a housing market with an uncertain future. However, activity in the market is still strong, as the number of sales agreed rose 1.5% on the previous month and 10.7% annually.
Earlier this week governor of the Bank of England Mervyn King said falls in house prices are more likely now than for some time, due to the unstainable rises seen over the past 12 months. The NAEA figures show that prices continued to soar last month, up 2.25% on April 2004. Property prices are currently 12.55% higher than this time last year - the highest price increase since March 2003 - as the typical property price hit an average of £206,343.
The continued acceleration in prices hit the bottom end of the market as the percentage of first-time buyers fell to only 13% of total sales, down from 14.1% the previous month. Those struggling to get on to the property ladder have been further hampered by two rises in interest rates in the last two months, bringing mortage rates close to 5%.
Over 75% of the estate agents surveyed believed that further interest rate rises, as hinted at by the Bank of England chief, would cause the housing market to plateau. Only 14% believed that it would cause a crash or more severe slowdown.
Richard Hair, president of the NAEA, says: “The governor's [Mervyn King] comments are reflecting the current story in the housing market. We are seeing a definite wariness among the public to commit to a market which they fear may be slowing. Nevertheless, the figures also show that sales and viewings are still strong, and further price increases indicate that homebuyers are still willing to pay close to the asking price for the property they want. The governor may be threatening a crash, but here at the frontline we are merely expecting a natural levelling out.”