Fears grow for housing market as demand withers

for sale sign

Demand for housing is withering on the vine, according to the latest monthly housing survey from Hometrack.

Data, collated from more than 5,100 of the country's estate agents and surveyors, found that the number of new buyers registering with estate agents fell in August by 2.2%.

This is the second consecutive month that interest among buyers has waned, with July figures showing a 1.3% slide. The average price of homes also fell by 0.8% during the month of August.

Conversely, the number of homes coming onto the market grew during the month by 2.4% in August and by a significant 14% over the last five months.

Richard Donnell, director of research at Hometrack, says: "The signs of a slowdown and price falls have been building since the election was called back in April.

"For the last few months there have been clear signs that an underlying trend in market conditions was starting to change on both the supply and demand side of the equation."

But Peter Bolton-King, chief executive of the National Association of Estate Agents (NAEA), says: "It's true that fewer people are looking at property at the moment but then what do you expect in August?

People are on holiday and estate agent offices are quiet up and down the country. The important thing is what happens in September and October when the kids go back to school."

He adds that the increase in property supply in recent months was positive as, according to NAEA figures, it bought more potential buyers to the market in July was recorded in June.

"You have to remember that it was because of a lack of property supply that house prices went up last year." 

The average proportion of the asking price that was achieved in August was still a healthy 93.5% according to Hometrack, although this has slipped from 94.3% recorded in June.

The average length of time that homes are remaining on the market before a sale is agreed has risen to 8.9 weeks in August from a low of 8.3 weeks in May.

The most recent housing market survey from the Royal Institute of Chartered Surveyors (RICS) showed that 8% more surveyors reported a fall rather than rise in house prices in July – the lowest reading in more than a year.

RICS spokesperson Ian Perry attributed the price fall to a boost in property supply following the coalition government's scrapping of home information packs and to a more cautious stance from buyers.

Perry expects the ‘softer trend' to continue throughout the second half of this year but says: "Agents are still generally optimistic about sales activity which should benefit from more realistic pricing of properties."