Prospective buyers in ‘wait and see’ mode as house prices continue to fall

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by Kay Murchie

Housing intelligence firm, Hometrack, has revealed that house prices have fallen for the eight consecutive month.

Average prices were down by 0.5% over the month of May, following a 0.6% fall in April. On a year-on-year basis, the annual rate of growth fell from 0.9% to -1.9%, its lowest level since November 2005 when it reached -2.3%.

Richard Donnell of Hometrack said what we referred to last month as the ‘buyer’s strike’ continues with a 6.7% fall in the number of buyers registering with agents over May.

It is too soon to say whether the level of monthly falls will now start to moderate as this will require an improvement in demand and sales agreed which are both linked to overall buyer confidence, added Mr Donnell.

The current trends in the survey indicate that pricing looks set to remain under downward pressure over the coming months, concluded Mr Donnell.

Hometrack also revealed that it now takes an average of 9.8 weeks to sell, up from 5.8 weeks this time last year. The number of viewings required is 14, up from 10.3 a year ago.

The housing slowdown has been having a devastating affect on housebuilders recently with the latest news being job losses for Taylor Wimpey.

The UK’s second-largest housebuilder announced it was to close 13 of its 39 offices across the UK which is expected to result in 600 job losses. This represents over 10% of its 4,700 UK workforce.

Last week, the Royal Institution of Chartered Surveyors said house prices would fall by only 5% by the end of the 2008. However, many economists believe the drop could be as much as 30%.

The Council of Mortgage Lenders are predicting a fall of 7% in house prices this year, this is figure is revised from the previous 1% fall they predicted last October.