01 June 09

House prices unchanged in May

First time in 20 months that survey has not registered a decline in prices… House prices remained unchanged in May - the first time in 20 months that the survey has not registered a month on month decline in prices. Stronger sales volumes, continued buyer interest and a dwindling supply of property for sale has provided a short term boost to market confidence. But the housing market outlook remains fragile… Given the weak outlook for the economy, house prices are expected to remain under downward pressure for the foreseeable future. In short, house prices may have remained unchanged but the outlook for the housing market remains fragile. A broad based recovery in the housing market is needed… Overall levels of market activity are well down on what would constitute normal market conditions. The purchasers that are returning are largely those confined to the more wealthy areas of the country, they’re also cash buyers or people requiring low LTV (loan to value) mortgages. However a broad based recovery in the housing market requires a broad base of buyers and the majority of would-be first time buyers remain excluded from the market. The number of sales agreed may be up, but the number of listings is falling… An increase in the number of sales being agreed rose by 9.4% in May and by over 43% in the last 3 months. However the number of homes listed on agents’ books fell slightly in May - by -0.2% - an increase of just 2.5% in the last 3 months. While supply remains static the number of buyers registering with agents is up by 6% in May and by 21% in the last 3 months. This has had the net effect of supporting prices over the month. Other lead indicators confirm a modest improvement… Other lead indicators confirm a modest improvement in market conditions with the proportion of the asking price being achieved rising to 90% for the first time since August 2008. Meanwhile the average time taken to sell a property has dropped below 10 weeks for the first time since May 2008. And across the country… No region reported a price increase and values were down in four regions by just -0.1% and static in the remaining six. Across the country as a whole house prices were down in 13% of postcodes compared to 58% in January and over 70% last autumn. But a word of caution… The outlook for the housing market remains uncertain and it would be dangerous to read too much into the fact that prices have not fallen over the month. There are a number of potential changes in the current supply/demand dynamics which could result in further downward pressure on prices in the months ahead. This month’s survey was based upon 6,087 responses from 1,776 agents and surveyors across all 2,300 postcodes in England and Wales.