House prices fell a further 0.1% for the 15th month in a row in September, according to the latest Hometrack survey.
But, it says, house sales have shown a marked improvement. Despite the number of buyers registering with estate agents remaining static last month (-0.5% change in August’s survey), activity has increased by 5.5% compared to 4.1% in August’s survey.
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.
As more transactions are occurring in the market, this suggests that buyer confidence is improving. But, while the number of buyers registered has increased by over 20% since the beginning of the year, there is still the issue of oversupply of housing stock. Hometrack says this month is no exception. While there has been no change in the number of buyers registered there has been continued increase in the number of properties coming on to the market. In September this increase was 1.9% in August it was 2.1%.
The resulting oversupply means prices will inevitably decrease again in the coming months, the research claims.
In the current buyers’ market, sales price as a percentage of asking price decreased to 93.2% in September compared 93.4% in August, indicating buyers are negotiating larger discounts and have greater bargaining power.
The length of time it takes to sell a house has increased marginally to 8.1 weeks compared to 8 weeks in August’ and 5.8 weeks in September 2004. The average number of viewings has also increased to 12.4 per sale, up from 12.1 per sale in August.
Of all the counties, only four have seen price rises this month, 21 counties remaining static and 32 seeing a fall in property prices. The areas reporting price rises were Central London & City (0.1%), Gloucestershire (0.1%) West London (0.1%) and West Yorkshire (0.1%). The counties reporting the worst price falls last month were East Sussex (-0.7%), Northamptonshire (-0.6%), Merseyside (-0.6%), North London (-0.5%) and Devon (-0.5%).
John Wriglesworth, housing economist at Hometrack, says house prices are continuing on a path towards more affordable levels helping to bring buyers come back to the market over the summer. But with buyers still obtaining an average of 7% discount off asking price, vendors have been slow to set prices at realistic and affordable levels.
Wrigglesworth says: “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.”
Added to this is research out today from Propertyfinder which suggests the housing market will strengthen into autumn.
The property website says buyers and sellers appear to agree on the outlook for the property market for the first time since September 2004.
It says over the next twelve months sellers expect prices to rise 0.6% and buyers expect a 0.4% rise.
Propertyfinder says the wider the gap between buyers’ and sellers’ views, the lower transaction numbers become. In September 2004, when buyers and sellers last agreed, transaction volumes were 148,000. By January 2005, when buyers and sellers disagreed most vehemently, transactions hit their lowest point, just 107,000. From April, as buyers and sellers increasingly agreed that house prices would be flat for the coming twelve months and that a crash was simply not going to happen, transactions steadily recovered from 117,000 in April to reach 133,000 in August.
Jim Buckle, managing director at Propertyfinder.com says: ‘With both buyers and sellers in such agreement in September, we can expect transaction volumes to continue to recover and predict a strengthening market into 2006. We stick by our forecast, made at the beginning of August, that volumes will reach 140,000 by November. There is no evidence in our survey to suggest that house prices are set to recommence their upward march, but expectations of flat prices are good for the overall health of the market. With incomes growing and a second interest rate cut likely by early 2006 meaning reduced mortgage payments, houses are becoming increasingly affordable. Buyers and sellers can go ahead with confidence’IFAonline
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