by Mark Johnston
July’s house prices.
Against a difficult economic backdrop, it could be argued thatUKhouse prices have shown resilience.
Martin Ellis, housing economist atHalifax, stated “At a national level, house prices have been very stable over the past year or so”.
Nationwide, Britain’s biggest building society house price index, has recorded its 4th fall in 5 months, in July. It also reported that prices dropped by £1,400 meaning property prices fell at their fastest annual pace for 3 years. This is the sharpest annual decline since August 2009.
According to mortgage lender Halifax, British house prices fell by 0.6% in July, this was a marginally bigger fall than their economists had forecast but it does leave the pattern of broadly stable prices intact.
The chief economist at Nationwide said “the weaker price trend observed in recent quarters is unsurprising given the disappointing performance of the wider economy”.
Even prices in London and the south east, which tends to be more resilient and have been keeping average prices up, saw growth slow to just 0.1%.
Property analyst Hometrack said that house prices have fallen for the first time in 7 months as the number of potential buyers shrinks while the volume of homes going on the market rises.
The latest data released by Hometrack also reveals the gap between supply and demand, number of homes going on the market now out strips potential buyers.
It seems that this gap looks set to widen further after an early and unusually rapid seasonal summer slowdown, this would mean that prices may fall further in the autumn.
Richard Donnell, the director of research at Hometrack, said “weaker demand is to be expected over the summer months, but compared to previous years; the seasonal slowdown has started earlier and developed more rapidly than in previous years”.
Estate agents have revealed a 2.1% decrease in potential buyers registering with them, but they also showed a 5.2% increase in new properties for sale.
A study therefore has reported that homes are staying on the market for an average 9.5 weeks which has increase from 9.4 weeks in June.
Miles Shipside, commercial director of Rightmove inLondonsuggested that there is also a significant price gap between seller’s expectations and what buyers are willing or able to pay. He added that “sellers need to address this valuation mismatch in order to be successful, at a time when theUKhousing market continues to be blighted by low transaction levels”.
To try and help with falling house prices and low transaction levels the Bank of England and the Treasury has launched its new ‘funding for lending’ scheme in the hope that it will provide support for the property market by pushing cheap money through lenders to borrowers.
However many experts have criticised this scheme and believe that rather than moves to encourage lending, the government should be applauding banks for lending more responsibly and not encouraging first time buyers in particular to invest huge sums of money in over priced assets.
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