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| MONDAY 29TH AUGUST 2005 |
 HOMETRACK
WARNS OF THREE YEAR STAND-STILL
The drop in interest rates has not affected the 14-month long
stagnating trend of the housing market, the property company Hometrack
has said.
In it’s August survey of the national housing market reports the
firm said the stagnating trend would likely continue for another three
years.
The survey showed a price fall of -0.1%, following last month’s
fall of -0.2%. The national average house price now stands at £161,000,
down from a peak of £167,700 in June last year and down over 3.7%
in the past 12 months.
Activity in the market has increased by 4.1% this month, (3% in July’s
survey), suggesting that some confidence has returned. However, the number
of new buyers coming on to the market has continued to fall, by -0.5%
(-0.3% in July’s survey).
With fewer buyers and a continued increase in the number of properties
coming on to the market of 2.1% (3.3% in July’s survey), the resulting
oversupply means that it is still a buyers’ market and prices will
inevitably decrease again in the coming months.
Sales price as a percentage of asking price has remained at 93.4% this
month. This indicates that buyers are still negotiating large discounts
of over 6%, although their bargaining power has not improved.
It now takes 8 weeks to sell a house, a fractional increase from 7.8
weeks in July’s survey, but up considerably from the 5.3 weeks
it took to sell in August last year. This can be attributed to the fact
that buyers have more choice and therefore take longer to sell. Despite
this, the number of viewings per sale has fallen to 12.1 (12.5 in July’s
survey).
Of all the counties, just three have seen price rises this month. 21
have remained static and 33 have seen price falls. The counties reporting
price rises are Leicestershire (0.8%), East London (0.1%) and West Midlands
(0.1%). Berkshire and Cambridgeshire are among the counties that remained
static this month.
The counties reporting the worst price falls this month are Avon (-0.6%),
Buckinghamshire (-0.5%) and Bedfordshire (-0.5%). West Sussex and Surrey
were among counties reporting falls of -0.4% this month.
Of the cities, two have seen price rises, 35 have remained static and
17 have seen price falls. The cities reporting price rises are Leicester
(1.7%) and Liverpool (0.1%). Blackpool, Bournemouth and Bradford are
among the cities remaining static.
The cities reporting the largest falls this month are Bath (-2.0%),
Milton Keynes (-1.7%), Guildford (-1.7%), Swansea (-0.9%) and Cheltenham
(-0.9%).
John Wriglesworth, Hometrack’s housing economist, said: "House
prices have failed to respond to the recent interest rate cut, and continue
their stagnating negative trend, which has now gone on for well over
a year."
"While transactions have picked up a little this month, a further
reduction in new buyers and a further increase in supply suggests no
prospect of price rises in the near future. It is a buyer’s market
with discounts achieved as a percentage of asking price typically being
well over 6%, equating to £12,000 savings on an average priced
property."
"It is now taking an average of nearly two months to sell a house
compared with just over five weeks in August last year, and we are forecasting
only 3% inflation over the next year [2006]. While there is still little
chance of a crash, another housing boom is unlikely for at least the
next three years. Over the short term sluggish but stable is the most
likely scenario."
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