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House prices fall for 15th month in a row

Hometrack reports accelerating price falls across the UK, with buyers melting away as the economy weakens

Further evidence of a double dip in the housing market is published today in a survey by property data specialist Hometrack, which revealed that prices fell by 0.1% in September, the 15th consecutive month of price falls.

A sharp fall in the number of new buyers, down 2.6% on the month, and a rise in the gap between asking prices and actual sale prices, point to a deepening recession in the market, Hometrack said.

“As the gap between supply and demand widens, we are likely to see an acceleration in the level of price falls as we head towards the end of the year,” said research director Richard Donnell, who forecast that falls will be heaviest in the north and north-east.

The brief recovery that began in mid-2009, largely in London and the south-east, has petered out and nearly all the house price indicators are now showing an increasingly distressed market.

The Land Registry, which holds the most complete record of property price data, reported a 0.3% decline in August, reversing a rise in July. Nationwide said last week that prices rose by 0.1% in September, but its three-month-on-three-month figures, generally considered a better indication of trends, have remained static.

The Hometrack data reveals that the remaining buyers in the market are making offers substantially below asking prices. The proportion of the asking price achieved by sellers slipped back again, to stand at 92.5%, while the time that the average property sits on the market increased to nine and half weeks.

The gap between asking prices and sold prices is highest in the north of England, at 9%, Hometrack said, and houses in the region also take longer to sell, averaging 11 weeks.

London continued to buck the trend, registering a 0.2% rise in prices in September. London’s performance, though, has masked the extent of falls elsewhere. “It has been the relative strength of the London market that has supported the headline rate of growth this year,” Donnell said.

Even upmarket homes in the south-east, outside the orbit of international buyers in central London, are witnessing price falls, according to estate agents Knight Frank.

Prime country houses – from sought-after cottages to manor houses – fell in price by 1.2% in the third quarter of 2011, said Knight Frank, with available stock rising sharply.

Liam Bailey, head of residential research at Knight Frank, said: “In normal times the prime country house market would follow the growth cycle set by the central London market, with a lag of around 18 months. London booms, the luxury country house sector follows.

“These are not normal times. Prime London property has risen in value by 36% since March 2009, but prime country houses are only marginally (5% on average) above their post-Lehman nadir reached in mid-2009. And, while London prices have kept rising through 2011, the country house market has stuttered to a halt.”

Knight Frank said that more than half of the £1m-plus properties it sells in London go to foreign buyers, while the market outside London is almost entirely domestic.

There is now growing agreement among economists that house prices will stagnate or drift downwards over the next 12 months. Nationwide expects prices to remain flat, but said the “downside risks” to this forecast have grown.

Yet sellers remain confident they will be able to find buyers in the face of the weaker economic environment. A survey by Zoopla, a property search engine, found that homeowners are predicting a 2.7% gain in house prices in their area over the next year, but 3.3% gain for their home . © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds