The deterioration in UK house prices accelerated in August and values could continue to fall for the next year, Hometrack has revealed.
The research firm said property prices fell by 0.3 per cent this month, compared to a slip of just 0.1 per cent in July, driven by a mis-match between new buyers and properties coming on to the market. The second successive month of declines means the average UK house is now worth £158,200.
Richard Donnell, the director of research at Hometrack, said: "The housing market is in the process of a modest re-pricing that is likely to run for the next 6 to 12 months. This follows a period of 18 months over which house prices have firmed rapidly on the back of a potent mix of rising demand and a chronic lack of housing for sale." The Hometrack data on the cooling market supports that of the closely-watched Halifax and Nationwide surveys so far this year. The Halifax said the annual rate of house price inflation slipped from 6.3 per cent to 4.9 per cent in July.
Highlighting the shift between supply and demand, Hometrack reported a 2.2 per cent fall in the number of new buyers registering with estate agents in August, compared with July. But the supply of homes being put on the market grew by 2.4 per cent in August – which is "well above" the average for what is typically a quiet month, said the research firm.
There was also a rise in the average time of houses being on the market, from 8.7 weeks in July to 8.9 weeks this month – the longest period for more than a year.
Mr Donnell said: "The signs of slowdown and price falls have been building since the election was called back in April. For the last few months there have been clear signs that that underlying trend in market conditions was starting to change on both the supply and demand side of the equation."
He added that "firmer pricing" and the abolition of home information packs have led to a "surge" of new properties coming to the market.
Mr Donnell said: "The unmistakable fact is that the availability of homes for sale has improved markedly and this has reduced the support for house prices provided by the scarcity of housing for sale over 2009 and early 2010."
Hometrack said that house prices fell across nine regions, although they were static in Wales. Prices in London tumbled by 0.4 per cent in August, the fourth consecutive month of falls. But the situation was worse in the South-east and North-west, which suffered monthly falls of 0.5 per cent.
Mr Donnell said: "Against a background of longer sales periods, rising supply and faltering demand, prices need to adjust to a level where sales volumes can be maintained. We expect further modest price falls in the coming months."
While concerns have been raised over the changing imbalance between supply and demand, the actual number of sales that estate agents are agreeing has continued to rise in recent months. This means that agents have a degree of confidence over the sustainability of house prices, despite worries on the outlook.
That said, in August, there was just a 0.8 per cent uplift in achieved sales, in contrast to an average uplift of 6 per cent in the last six months. Mr Donnell said: "While this may be a seasonal trend, we expect lower sales volumes to continue – not least because much of the new supply is reliant on strong offers being achieved."Reuse content