Hometrack: House prices down 0.5 in May

Monday, 26 May 2008 12:19 AM

House prices in England and Wales fell for the eighth month in a row during May, according to the latest national housing market survey from Hometrack.

Research from the organisation finds average prices were down 0.5 per cent during the month, following a 0.6 per cent fall in April.

Average prices fell in 53 per cent of all postcodes, with the sharpest falls located in East Anglia and the East Midlands.

On a year-on-year basis, the annual rate of growth fell to -1.9 per cent, down from -0.9 per cent in April. This is now the lowest level since November 2005, according to the company's national house price survey.

The research also finds the number of new buyers registering with estate agents tumbled 6.7 per cent in May, accentuating a 2.8 per cent fall the previous month.

This has facilitated a sharp rise in the amount of property languishing on the market, up seven per cent in the last two months and 20 per cent since February.

Just 92 per cent of properties sold now reach their asking price, down from 93.5 per cent in March.

"It is too early to say whether the level of monthly falls will now start to moderate as this will require an improvement in demand and sales agreed which are both linked to overall buyer confidence," comments Richard Donnell, Hometrack's director of research.

"The current trends in the survey indicate that pricing looks set to remain under downward pressure over the coming months."

The latest survey also shows an increase in the time taken to sell a property which now stands at 9.8 weeks, up three weeks from 5.8 weeks in May 2007.

"Hometrack's May survey is weak in every respect, indicating that the housing market continues to sink, having been holed by stretched buyer affordability and very tight lending conditions," explained Howard Archer, of analysts Global Insight.

However, in line with most analysts, Hometrack does not predict a long-term correction in house prices.

"In order to get sizable price falls a large majority of transactions need to be 'forced' sales which are mostly prevalent in periods of rising unemployment and recession," said Mr Donnell.

"The fall in buyer confidence over the last six months has certainly impacted on transaction volumes but we do not believe that this is a precursor to a major rise in forced sales and large price falls."

Chris O'Toole

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