Housing market 'stagnates'
21 July 2003
House prices in the UK have grown by over one per cent, but the low number of sales and the high number of properties on estate agents' books shows that the expected 'bounce' after the conflict in Iraq has "failed to materialise".
The latest survey from Rightmove shows that House prices in the UK in June grew by 1.3 per cent , taking annual house price inflation to 13 per cent , half of the 23.6 per cent recorded in January of this year.
The property website found that the number of transactions remained low and the number of properties on estate agents' books has increased. The number of properties coming off the market has overtaken the number of new instructions.
According to Rightmove, the market is beginning to stagnate because first time buyers cannot enter the market due to high asking prices. Rightmove argues that lenders' reluctance to offer larger multiples on mortgage loans to first time buyers is creating difficulties for estate agents to complete their chains.
Rightmove warned that the number of properties on estate agents' books has increased by 58 per cent since last year and the over supply should help to restrict prices
The slowdown in the market is beginning to affect areas that have seen strong growth. The North has seen strong house price growth over recent months but Yorkshire and Humberside area have seen their first month of price falls.
All of the house price growth in London from 2002 has now been wiped off by the property price falls in 2003.
The Centre for Economic and Business Research (CEBR) has raised its forecast for 2003 and 2004, in the belief that the housing market boom will return in London and the Southeast.
The CEBR defended what had been called an over optimistic appraisal of the housing market over the year by claiming that the signs had shown it had been pessimistic.
The research consultancy believes that city bonuses will grow sharply in 2004 stimulating London's housing market.