Expect a buyer’s market for rest of year, says Hometrack

House prices have risen just 0.1% for the second month in a row, Hometrack said this morning. However, its findings are at odds with this morning’s Nationwide survey, showing house prices across the UK to have edged up 0.8% in August, after a rise of 0.2% in July.

According to Nationwide, it brings the average UK house price to £189,306 – 11% higher than this time a year ago.

Nationwide said that it was the 16th consecutive monthly rise. Chief economist Robert Gardner said: “House price growth continues to outpace earnings by a wide margin, with average wage growth running at less than 1% in recent months.”

But he added that despite this, housing affordability was not stretched by historic standards.

Gardner went on: “The outlook for the housing market remains highly uncertain.”

He said: “Surveyors report that new buyer inquiries have moderated somewhat in recent months, and the prospect of interest rate increases together with subdued wage growth may temper demand in the quarters ahead.”

The more downbeat Hometrack said that the gap between supply and demand is already narrowing “rapidly”, and described demand as “subdued”.

The firm said that all the evidence indicates a shift towards a buyer’s market in the remainder of the year.

According to Hometrack, sellers are already having to accept “larger discounts” to the asking price to achieve a sale.

The Hometrack report – which never gives actual prices although it talks about price movements – said there was a 0.9% drop in new applicants, but a 0.1% rise in supply during August.

Time on the market has lengthened to 6.3 weeks.

In London, time on the market is much lower at 4.9 weeks – but this compares with 2.7 weeks in February.

Richard Donnell, director of research at Hometrack, 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.

“Talk of a housing bubble and warnings from the Bank of England have impacted sentiment, while tougher affordability checks for mortgages and rumblings around interest rate rises is starting to make buyers think twice.”

Reference: www.propertyindustryeye.com