Chill over housing market as new buyers fall by 10.5%

Home prices have not risen for 18 months and could fall by 5 per cent this year, say analysts
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The Independent Online

There is no respite for the depressed property market as the number of new buyers has slumped by a 10th in January from the previous month.

The latest monthly survey from the property analytics firm Hometrack, published today, reveals that the number of new buyers registering with estate agents fell 10.5 per cent in January, after falls of 2.2 per cent and 6.3 per cent in the previous two months.

The length of time it takes for a property to sell is also increasing, from 9.9 weeks in November to 10.2 weeks in January. Meanwhile the number of sales agreed, which climbed 4.6 per cent in November, has fallen 14.3 per cent in the past month.

Hometrack reports that prices remained static. The survey indicates that there has now been no increase in house prices for 18 months.

Richard Donnell, director of research at Hometrack, said: "The survey reveals a market dogged by uncertainty. On a national basis house prices have not increased over the last 18 months, since June 2010."

However there was a small rise in London prices, which offset falls in other regions. The relatively positive housing market in the capital is set to continue through 2012 as the Olympics effect continues to boost interest in the City's property, said Mr Donnell.

"Overseas buyers looking for a safe haven in the midst of global uncertainty will continue to invest in the capital and the super prime postcodes of central London," he added.

The average time a property remains on the market provides the clearest guide to the relative health of the housing market, said Mr Donnell. But while nationally the average time has fallen to 10.5 weeks, the regional figures reveal a widening north-south divide.

In the northern regions and Midlands, the average time stands at 11.9 weeks, just under three months. In the relatively buoyant by comparison London market, the time spent on the market has fallen to 6.5 weeks, lower than the 6.9-week wait recorded at the beginning of 2011.

Economists are looking to some key lending and house price figures due this week to give a further indication of the faltering health of the property market. The Bank of England is expected to report tomorrow that mortgage approvals for house purchases rose to a two-year high of 54,000 in December from 52,854 in November. However, mortgage approvals remain extremely low compared to long-term norms. A level of 70,000-80,000 has in the past been considered consistent with stable house prices.

Meanwhile, the Nationwide is expected to report this week that house prices fell 0.2 per cent month-on-month in January, as they did in December.

Howard Archer, chief economist at IHS Global Insight, said: "We expect house prices to fall by 5 per cent in 2012.

"Despite the recent modest rise in mortgage approvals, the housing market is likely to be increasingly pressurised in 2012 by weakened economic activity, rising unemployment, muted wage growth and very low consumer confidence."