House prices static for second consecutive month

House prices in England and Wales were unchanged for the second consecutive month during September, according to property portal HomeTrack.co.uk.

As a consequence the organisation now predicts the annual rate of growth will slow - down from the 6.8 per cent recorded in April this year to around five per cent.

While demand fell during September, a lack of "saleable" homes provided buoyancy to average property prices.

HomeTrack recorded a 2.7 per cent drop in the number of sales made during September, coupled to a one per cent fall in August.

"Turmoil in the financial markets has created a period of inertia in the housing market with buyers and sellers unwilling to commit until the outlook becomes clearer," commented Richard Donnell, director of research at HomeTrack.

Demand also fell by four per cent in September, continuing a trend which has seen an eleven per cent fall in demand since June.

"This level of change in demand is not unusual around Christmas and the New Year but the last time there were three consecutive monthly falls in demand was in the second half of 2004," continued Mr Donnell.

"This was the last time that higher interest rates and weaker market confidence impacted on the housing market."

In 2004/5 moderate falls in prices were exacerbated by an increase of 11 per cent in the level of property coming onto the market.

However, this is not the case today.

"An important difference between now and 2004 is today there are no signs of any increase in new supply. If anything there appears to be a tightening in supply in the face of greater uncertainty," explains Mr Donnell.

"Indeed, many of the homes put on the market in the early summer, in advance of the introduction of home information packs (Hips), may well be withdrawn by those who do not need to sell and who were looking to take advantage of what were then stronger market conditions."