House Market Cooling
Property analyst Hometrack has reported that the gap between house sellers’ asking prices and the amount buyers are willing to pay is widening amid growing signs that the market is cooling.
Sellers in England and Wales achieved 95.9 per cent of the asking price in August, falling for the third month in a row from 96.8% in May. However, house prices increased by 0.1 per cent month on month for the second month in a row in August.
Hometrack said that an increasing supply of properties for sale and weakening demand means that properties were lingering on the market and having to accept bigger discounts.
These findings suggest that the market will see house price growth slow in the coming months as opposed to prices starting to fall.
Hometrack said that property prices only tended to fall when the percentage of the asking prices that sellers achieve fell below 94 per cent.
The report found that house price growth in London was underperforming the rest of the country as buyers become more price resistant after the strong increases in the capital in the first half of the year.
11 per cent of London postcodes recorded month on month increases in property values in August, compared with 19 per cent outside of the capital. This growth was coming from the commuter belt in the south-east, according to Hometrack.
The strongest growth was seen in Wales, where prices saw a 0.5 per cent increase month on month.
Hometrack reported that, in February, 87 per cent of London postcodes saw prices increase month on month, compared with 11 per cent now.
The amount of time it takes to sell a London property has almost doubled from February too, from just over two and half weeks to nearly five weeks. This is still less than the average across England and Wales, where a house on the market typically takes over six weeks to sell.
Last month, the National Association of Estate Agents (NAEA) said that four per cent of homes were sold for their asking price in July, compared with 19 per cent in May.
In July, the NAEA said that 66 per cent of homes were sold for less than the asking price, whereas in May, less than half of properties sold for less than the asking price.
Director of research at Hometrack, Richard Donnell, said: "The latest survey continues to point to clear evidence of slowdown, particularly in the London market.
"This is not a huge surprise for August but the signs of a slowdown in market activity were starting to emerge back in May, with evidence of growing resistance to rapid price rises in the London market.
"Important lead indicators in this survey are turning and pointing to a loss of momentum in house price growth, in particular a widening gap between asking and achieved prices in the face of weaker demand and an increase in the time on the market.
"Both indicators are coming off a positive base which suggests a slowdown in the rate of growth rather than price falls."