The decline in the housing market that began in many parts of the country during the summer appears to have spread and accelerated.
New data released today suggest prices are now falling in every part of the country for the first time in 18 months, and that the speed of the drops is gathering pace.
Hometrack, the housing market analyst, said that the average price of a house fell by 0.4 per cent in September, after a 0.3 per cent fall in August and and 0.1 per cent in July. Some 34 per cent of postcodes experienced an average price decrease last month, up from 30 per cent in August and only 12 per cent in July. Price increases were seen in just 2.3 per cent of postcodes.
Richard Donnell, Hometrack's director of research, gave warning that the housing market was likely to deteriorate further. "This is part of an ongoing repricing process which began six months ago and is set to stretch well into 2011," he said. "The markets is entering the second phase of the repricing process as a response to falls in both sales volumes and demand."
Hometrack's data reveal that fewer buyers are now registering with estate agents, with the number of clients down by 6.5 per cent. Demand for housing fell by 2.9 per cent last month alone. Despite falling demand, the supply of new homes for sale continues to rise, with a 7.2 per cent increase in the number of houses put on the market over the past three months. Though that expansion has begun to slow over the past month, continued rising supply while demand falls back will mean further price falls.
Sellers have already been forced to begin to settle for lower offers, with the typical home now going for 93.2 per cent of the asking price, down from 94.3 per cent.
The South-west of England was the worst affected region last month, with price falls averaging 0.6 per cent, though both the South-east and East Anglia were down by 0.5 per cent. The North-east of England, by contrast, was down just 0.1 per cent.
Mr Donnell said, however, that despite the worsening of market conditions, he did not expect to see a full-blown house price crash. "Over the rest of the year and into early 2011, agents will start to focus on repricing the property on their books to a level where transactions volumes are maintained," he said.
"Talk of a double dip, with the implication being that the market will see double-digit house price falls, is over-done despite the weak outlook for demand. We expect a slowdown in the volume of homes coming to the market to limit the scale of absolute price falls over the next 12 months."