House prices slip back as buyers bow out

A tough month for the housing market was recorded for September by Hometrack.

Reporting this morning, the property data analyst said demand weakened, time to sell increased and unsold stock was repriced.

New applicants registering with agents dropped 3.6% from August, while sales agreed edged down by 0.4%. There was also a slight tightening of supply, with a 0.9% drop in listings.

Average time on the market rose to almost ten weeks, up from 9.5 in August. But the average masked big regional differences, with over three months being the norm in the east Midlands, North-East and North-West. By contrast, time to sell in London has been rising over the last few months, but still stands at only 5.8 weeks.

No region registered house price increases. In London and the South-West they were static, but everywhere else they fell.

Although the average percentage of asking prices remained unchanged at 93%, the gap between asking and achieved prices is 8.1% in the North – and, said Hometrack, starting to widen in London and the South, where the gap is currently 6% and 6.5% respectively.

Richard Donnell, director for research at Hometrack, said: “House prices fell for the third month in a row on the back of weakening demand, a fall in sales agreed and a repricing of unsold stock.

“While the Government’s Funding for Lending scheme is likely to support a modest increase in mortgage lending, the uncertain economic outlook, together with affordability pressures, will continue to act as a drag on housing market activity.

“Pricing will remain under slow downward pressure, but the tightening of supply will limit the scale of price falls in the short term.

“The last four Hometrack surveys have reported a decline in housing demand, with September registering the largest fall.”

* Separately, Knight Frank said that selling prices of prime country properties have been falling. The agent said they went down by 0.9% in the third quarter, and are 4.3% lower than a year ago.

Grainne Gilmore, head of UK residential research at the agent, said: “Average values have been on a downward trajectory for much of the last two years.”

She said the biggest price drops were on homes worth £2m plus – showing the effect of the new Stamp Duty – but that homes worth over £4m have gone up in value.

She also said that transactions are now taking longer and falling through more often. There had been a 14% increase in sales agreed compared with the third quarter of last year, but an 8% drop in exchanges.

See also next story on how new homes are faring.