More homes on the market – but prices rise again

The booming property market paused for breath in July as more sellers dipped their toe in the water, new figures showed today.

The latest housing survey from Hometrack showed that house prices grew 0.3 per cent during the month, easing from the 0.4 per cent growth recorded in the previous two months.

A scarcity of housing for sale has been a key feature of the market in recent months as supply fails to keep pace with demand.

However, the trend reversed in July with a 2.4 per cent increase in supply on the back of improving market sentiment, the first increase in new supply since the spring.

Richard Donnell, director of research at Hometrack said: “This is a pattern that has been seen before in recent years where improving sentiment brings more homes to the market. This in turn shifts the balance of supply and demand which leads to a moderation in the scale of price rises.”

However, Hometrack does not expect the increased supply to make an impact on the scarcity of homes for sale. “For the new supply that comes to the market, the risk is that vendors look to push asking prices too far ahead of demand, which will result in lower sales volumes later in the year.”

The figures showed 29 per cent of the country registering price rises and just 1.8 per cent recording price falls in July. London continued to drive overall house price growth with prices in the capital rising 0.7 per cent in July.