First-time buyers wait it out as house prices slow

UK house prices grew by 0.3% during the year to May 2008, but this signalled a decline in the annual growth rate recorded in April 2008 of 1.7%, according to Assetz.

The index from the property investment company collates the results of the five major UK house price indices (Financial Times House Price Index, Rightmove, Nationwide, Halifax and Communities and Local Government).

It showed that although prices were still growing, the rate of growth has slowed, with a 10.6% decrease between May 2007 and May 2008. This slowdown has been in evidence for nine consecutive months, with the smallest annualised growth recorded last month since Assetz set up its index in 2005.

The average house price decreased by £1,741 in May 2008, according to Assetz, compared with a drop of £238 in the 12 months from May 2007, when the average price was £209,917.

Stuart Law, chief executive of Assetz, said: “We are in a period of weakness, not a crash, and vendors are more easily negotiated with, provided they are a forced seller. I would recommend that buy-to-let investors take advantage of the current market and continue adding to their portfolio by buying from motivated sellers.

“I am frequently being told by both estate agents and developers that there is a great deal of pent-up demand in the market from first-time buyers, restricted by the current limited mortgage availability and higher deposit requirements. Demand has not gone away, buyers still want to purchase a home, but they are waiting for improved deposit requirements.”

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