Hometrack: House prices fall for fourth straight month
House prices declined for a fourth month in January according to the latest survey from Hometrack, the housing market research company.
The average cost of a home in England and Wales fell by 0.3%, the same rate as in December, to £174,700.
The annual rate of growth also continued to fall, easing to just 2.3% in January, down from 3.6% in December and the lowest level since June 2006.
Meanwhile, the number of new buyers registering with estate agents continued to fall, dropping by 11.5% during the month, following falls of 7.9% and 9.1% in December and November respectively.
There was also a shortage of homes coming on to the market, with 4.6% fewer properties put up for sale than during the previous month, causing levels to be 10% lower than six months ago.
Unsurprisingly, the lack of activity in the market led to an increase in the amount of time a home takes to sell to 8.5 weeks, the highest level since the survey first began in 2001, with homeowners now getting just 93.5% of their asking price, down from around 96% a year ago.
However, the extent of price falls decreased with agents reporting prices down across less than a quarter (23%) of the country, compared to 31% in December.
Richard Donnell, Hometrack’s director of research, said: “Weak confidence among would-be purchasers continues to put downward pressure on house prices although the scale of the recent falls is relatively small when put in the context of gains over the last few years.
“Underlying prices are still being supported by a continued tightening in the supply of homes for sale, a trend that is likely to continue. The short term outlook for market activity hinges as much around the outlook for UK interest rates as it does the outlook for financial markets.”
The group said people’s unwillingness to either buy or sell property meant there was likely to be a continued lack of homes coming on to the market, which would support prices in the short-term.
But it said the turmoil in world equity markets during the past week will have done little to encourage market activity. Despite the rate cut last December the latest comments by the Governor of the Bank of England Mervyn King may place a question mark in people’s minds as to the timing of any future cut in interest rates.
With no immediate improvement expected on the demand side, there is likely to be a continued downward pressure on prices which were down across all regions over January - London and the South West recording the largest falls (both -0.4%).
“With most buyers also being sellers, households are now waiting until there are signs of general stability before committing to the market. Wait and see is likely to remain the default position of most homeowners unless they need to move, for the brave hearted there could be some deals to be done if the seller needs to sell or is realistic on the achievable price,” says Donnell.