Buyer increase fails to halt house price falls
Buyers are returning but supply still exceeds demand
Monday, 24, Oct 2005 09:01
House prices fell for the 16th consecutive month despite an increase in buyers coming to the market, new figures show.
According to Hometrack's October survey prices fell by 0.1 per cent this month, and 3.5 per cent over the last 12 months.
The survey, which presents the grimmest picture of the housing market of any of the regular housing market surveys, has now recorded falling prices for every month since July 2004.
But it continues to record increases in buyer activity, with the number of buyers registering with estate agents increasing by 2.1 per cent in October, and by 22 per cent since the beginning of the year.
Activity has increased by 5.9 per cent this month, but Hometrack says that with supply still exceeding demand house prices will continue to fall.
"The key feature of the market this month is a significant increase in house sales activity, helped by more buyers returning to the market," said John Wriglesworth, Hometrack's housing economist.
"However, the number of houses for sale has also increased and as a result, excess supply continues to plague the market. House prices falls continue unabated."
The average house price according to Hometrack now stands at £160,700, down from June 2004's peak of £167,700.
The increasing number of buyers in the market has led to a decrease in the time taken to sell a house from 8.1 weeks in September to eight weeks in October; but this is still well above the figure of 6.5 weeks for twelve months ago.
Mr Wriglesworth is, however, optimistic about the market's prospects for 2006.
"Annual house prices deflation this year looks set to be around four per cent," he said.
"However, 2006 should see a recovery as rising household incomes should help improve house purchase affordability. Baring interest rate rises or significant jumps in unemployment . house prices should resume their upward path before the middle of next year."
At a county level, only Lancashire has seen price rises in October, of 0.1 per cent; while Leeds (0.2 per cent) and Liverpool (0.1 per cent) are the only cities reporting house price rises.