Property prices down 7.3%
The average home now costs as much as it did in March 2006.
Richard Donnell, Director of Research at Hometrack, said:
“Weak consumer confidence continues to undermine demand for housing with a 35% fall in the number of applicants registering with agents over the last six months.
“The supply of homes for sale has started to shrink in recent months as some homeowners take their properties off the market but the scale of the decline in demand means prices remain under constant downward pressure,”
Hometrack’s latest national survey showed that 75% of the country saw price falls during the course of the month, with the largest annual falls recorded in London (-8.6%) and the South West (-8.1%).
“The outlook for demand is set to remain weak as consumers focus their attention on the economy. The expectation of a forthcoming recession and rising unemployment will further undermine demand for housing and continued price falls are inevitable in the months ahead.
“However, there are signs in the latest survey that vendors are becoming more realistic on pricing -something that may start to slowly free up the current logjam in transaction volumes which are at a record low.”
“The key question is how far do prices have to fall to price buyers back into the market? The answer will differ between markets and property types.
“Smaller properties where buyers typically require higher LTV mortgages to finance purchases are likely to see greater falls than larger sized properties where LTVs are generally lower.
“Indeed, the survey shows that over the last year the average price of a flat has fallen by 8.3% compared to 6.7% for a detached house.”
After five months of falling sales volumes, the latest survey highlights a 5.4% upturn in the number of sales agreed over October.
“This could be early evidence that vendors are finally starting to accept lower offers from purchasers after what has been a year long stand off.
“Unlike more liquid markets the re-pricing of housing market tends to be a drawn out process that can take three to four years.
“However, the sheer scale of the fall in transactions over the last year means that agents will want to engineer an improvement in volumes in the market. The only way this can be achieved is to encourage vendors to be more realistic on pricing.
“The unprecedented events of recent months are likely to encourage vendors to accept lower prices much faster than they would normally have done.”