02 November 09

House Prices Edge up Despite Clear Slowdown in the New Buyer Demand

House prices continue to rise… House prices grew by 0.2% in October 2009 - the third consecutive increase which brings the year on year rate of house price growth to -4.2%. As has been the case for the last six months, an improvement in market sentiment has resulted from a mismatch between demand and a lack of supply. But buyer registrations begin to slow… Over the spring and early summer agents were reporting new buyer registrations growing by an average of 7.5% per month, but the last three months have seen new buyer registrations average just 1.1% a month. This suggests that the pent up demand that has boosted the market in recent months is starting to fade in the face of firmer pricing and fewer clear bargains. While the volume of buyers on agents’ books is looking far healthier than six months ago, slower growth in demand could well reduce the upward pressure on prices in the coming months. Pricing has firmed in recent months… Pricing has firmed in recent months - albeit off a low base - on the back of higher sales volumes and improved sentiment. The proportion of the asking price being achieved currently stands at 92.9% - this is within 2% of where it was at the start of the credit crunch (94.8%) and compares to a recent low of 88.3% in February 2009. But time taken to sell remains below peak of the market… The average time taken to sell a property is still some 30% off the levels seen at the peak of the market in 2007. The current time to sell averages 8.4 weeks compared to a low of 5.8 weeks seen in May 2007. Price rises not uniform across the country… Price rises were registered across just 16% of the market. Across the remaining 84% of the country, prices remained static. Like previous months, the majority of price rises and general improvement in market conditions have been concentrated primarily in London. In London prices grew by 0.4% during October and have risen by 1.1% over the last 3 months - more than double the national increase of 0.5% over the same period. Trends across the market are highly polarised and dependent on local market conditions. The average time to sell in London for example currently stands at 5.3 weeks, this compared to 12 weeks across Wales and 10.9 weeks in the East Midlands. The Hometrack survey is the largest monthly survey and provides the latest insight into market trends right across the whole market. This month’s survey was based on over 6,000 agents and surveyors across all 2,300 postcodes in England and Wales.