House prices 'cooling' in August

Experts say holiday effect may be masking real performance of housing market

House prices in August rose just 0.1 per cent compared to July, says a new report from Halifax which puts the average house price now at £186,270.

However, between June and August, prices were three per cent higher than in the previous three months, and 9.7 per cent higher than the same time last year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, described the results as evidence of "further cooling" in the housing market.

"It is perhaps not surprising as it tends to be a quieter time of year," he said. "However, the three month data also points to a less frenzied market, which is good news for buyers.

"The combination of more property coming up for sale and the prospect of an interest rate rise at some point in the future is applying the brakes to the runaway market. However, with a number of lenders reducing their two- and five-year fixed-rate mortgages in the past couple of weeks there are still some excellent deals available for buyers who are concerned about rate rises and want to lock in. Assuming you can meet stricter lending criteria, it could be a great opportunity."

Andy Hatoum, co-founder of property search engine Placebuzz.com, said that the easing in property prices is likely to be a 'false reading' of how the housing market is actually performing as viewing numbers tend to drop off as people go on their summer holidays.

"Next month's figures will be a better indicator of where the property market is heading," he said. "It is only a matter of time before prospective buyers, especially in the capital, realise the lunacy of price growth and therefore put their plans on hold. The question remains, what now for fragile areas that haven't recovered to pre-recession levels?"

Guy Meacock of buying agency Prime Purchase, added: "On balance the next few months will be the time to buy a home rather than sell. Vendors who want to exchange by Christmas are coming to market at an unfashionable time of year and may need to be more flexible on the price if they want to meet that deadline. Prices are already softening so there are good opportunities for buyers."