UK house prices are falling

From today’s Guardian Newspaper:

• Larry Elliott
• The Guardian,
• Monday May 26 2008

House prices in England and Wales fell for the eighth successive month in May as potential purchasers continued to shun the property market during the traditional spring buying season, according to a survey by Hometrack.

The housing intelligence business said the 0.5% drop in prices followed a 0.6% fall in April and meant the average cost of a home was 1.9% cheaper than in May 2007 – the fastest rate of decline since November 2005.

Richard Donnell, Hometrack’s director of research, said: “What we referred to last month as the buyers’ strike continues with a 6.7% drop in the number of buyers registering with agents over May, following a 2.8% fall over the previous month.”

The survey found that the supply of homes continued to rise, with the 20% jump in the number of homes on the market since February pushing down prices.

Donnell said it was too early to say whether the slightly smaller monthly fall in May meant that the pace of decline in prices was starting to moderate. “The current trends in the survey indicate that pricing looks set to remain under downward pressure over the coming months,” he added.

Sellers are having to cut prices to achieve sales, with the proportion of the asking price being achieved by vendors falling from 93% to 92.3% in May – the lowest proportion since the Hometrack survey began in 2001. With buyers reluctant to commit themselves, the time taken to sell a property has increased sharply over the past year, from 5.8 weeks to 9.8 weeks.

Donnell said he thought it unlikely that there would be a major rise in forced sales and hence large price falls over the coming months but added: “Improved buyer confidence is the key to any stabilisation in pricing levels, although there is also likely to be a growing number of households over the coming months who need to move.”

See also: Other posts under the label ‘UK.’