Confidence in housing market falls with prices

Anxiety about the health of Britain's housing market will be rocked further today, with two new reports warning that both prices and consumer confidence are falling. Hometrack, the property analyst, said that house prices fell by 0.1 per cent in July, the first time it has registered a reduction for 15 months, while Rightmove, the online estate agency, saw a sharp fall in the number of people now expecting the property market to be higher in 12 months' time than today.

Hometrack's data, which reflects regular surveys of more than 5,000 estate agents and surveyors, shows that the biggest factor in the market's reversal was a notable fall in demand for housing over the month, with buyers down by 1.3 per cent on June.

While some of this falling demand might be seasonal, the drop is much larger than is normally seen between June and July. Hometrack said that increased concerns about the economy – particularly the impact of Budget spending cuts – were to blame.

The supply of housing coming up for sale, meanwhile, still appears to be rising sharply, with Hometrack registering a 3.6 per cent increase during July.

The abolition of home information packs and an extended period of rising prices seem to have tempted more sellers on to the market. The result is that property has become harder to sell, with the average time on the market for properties now close to nine weeks. Buyers are also less likely to get their full asking price.

Hometrack warned July's decline might be a key moment, as other recent surveys, notably from Halifax and Nationwide, the UK's two biggest mortgage lenders, also registered lower prices.

"The fall in prices marks a turning point for the market following 12 months characterised by a lack of homes for sale and resurgence in demand, primarily for family housing in southern England," said Richard Donnell of Hometrack. "Further modest price falls are inevitable over the second half of the year as the volume of homes for sale continues to rise and demand remains weak on the back of concerns over the wider economic outlook and uncertainty over the impact of recently announced cuts in government spending."

Source : David Prosser - The Independent