House prices fall again

Monday, 3 October 2005 12:00 AM

Housing market activity is on the increase but this has not stopped house prices falling for the 15th consecutive month, new figures show.

House prices fell 0.1 per cent in September, following similar falls in July and August, according to research firm Hometrack.

The average house price now stands at £160,900, a fall of 3.7 per cent during the last 12 months and down from June 2004's high of £167,700.

Although the number of buyers in the market remained static in September, housing market activity increased by 5.5 per cent, suggesting buyer confidence is improving, Hometrack says.

But the market is still suffering from oversupply, with the number of properties coming onto the market - up by 1.9 per cent in September - continuing to out pace the number of registered buyers.

Hometrack housing economist John Wriglesworth warned that oversupply would continue to put downward pressure on house prices.

"House prices are continuing their bumpy path towards more affordable levels, and this has helped buyers come back to the market over the summer. However, we are still not in recovery mode in terms of house prices, as supply continues to outstrip demand," he said.

September's data shows that sellers were achieving 93.2 per cent of the asking price, down from 93.4 per cent in August - a sign of buyers' greater bargaining power.

It is also taking longer to sell a house in today's market, with the average length of time increasing from eight weeks in August to 8.1 weeks in September. This is well above September 2004's figure of 5.8 weeks.

Mr Wriglesworth added: "With buyers still obtaining an average of seven per cent discount off asking price, vendors have been slow to set prices at realistic and affordable levels. However, lower interest rates, growing incomes and full employment, as well as lenders relaxing their lending multiples are all helping boost demand, albeit slowly.

"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 minus five per cent 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."

Four areas of the country bucked the prevailing trend during September and actually saw price rises. Central London, west London, Gloucestershire and West Yorkshire all enjoyed rises of 0.1 per cent.

East Sussex, on the other hand, saw price falls of 0.7 per cent, while Northamptonshire and Merseyside saw falls of 0.6 per cent. Prices fell by 0.5 per cent in north London and Devon.

Nationwide's house price index, out last week, reported a 0.2 per cent fall in house prices during September. It was the first time this year that Nationwide's survey had reported consecutive house price falls.

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