House prices fall a further 0.1%

The Hometrack September survey of the national housing market reports a further fall of -0.1%,

House prices have now been falling for 15 consecutive months. The national average house price now stands at 160,900, down from a peak of 167,700 in June 2004 and down over 3.7% in the past 12 months.

Despite the number of buyers registering with estate agents remaining static this month (-0.5% change in Augusts survey), activity has increased by 5.5% (4.1% in Augusts survey). As more transactions are occurring in the market, this suggests that buyer confidence is improving.

However, while the number of buyers registered has increased by over 20% since the beginning of the year, supply has continued to over shoot. This month is no exception. While there has been no change in the number of buyers registered there has been a continued increase in the number of properties coming on to the market of 1.9% (2.1% in Augusts survey).

The resulting oversupply means that prices will inevitably decrease again in the coming months.

In the current buyers market, sales price as a percentage of asking price has decreased to 93.2% (93.4% in Augusts survey) indicating that buyers are negotiating larger discounts and have greater bargaining power.

The length of time it takes to sell a house has increased to 8.1 weeks (8.0 weeks in Augusts survey), compared with just 5.8 weeks in September last year. The average number of viewings has also increased to 12.4 per sale (up from 12.1 per sale in Augusts survey).

Of all the counties, only four have seen price rises this month, whereas 21 have remained static and 32 have seen price falls. The areas reporting price rises are Central London & City (0.1%), Gloucestershire (0.1%) West London (0.1%) and West Yorkshire (0.1%).

The counties reporting the worst price falls this month are East Sussex (-0.7%), Northamptonshire (-0.6%), Merseyside (-0.6%), North London (-0.5%) and Devon (-0.5%).

Of the cities, two have seen price rises, 40 have remained static and 12 have seen price falls. The cities reporting price rises are Leeds (0.4%) and Bath (0.1%). The cities reporting the largest falls this month are Brighton (-2.0%), Plymouth (-1.9%), Milton Keynes (-1.7%), Reading (-0.7%) and
Lincoln (-0.7%).

John Wriglesworth, housing economist at Hometrack, says: “House prices are continuing their bumpy path towards more affordable levels, and this has helped buyers come back to the market over the summer. However, we are still not in recovery mode in terms of house prices, as supply continues to outstrip demand.

“With buyers still obtaining an average of 7% discount off asking price, vendors have been slow to set prices at realistic and affordable levels. However, lower interest rates, growing incomes and full employment, as well as lenders relaxing their lending multiples are all helping boost demand, albeit slowly.

“Hometrack believes the present trend of house price falls will end before the end of this year. While house price falls are on track to meet our -5% forecast for the year, we expect a reasonably strong rebound for 2006. While another boom in house prices is not in prospect, a house price crash can clearly be ruled out.”