Housing market shows signs of slow down

28 June 2004
House price rises appear to be slowing as demand falls relative to supply.

It is the third month running that the market has shown signs of cooling off, with price rises easing steadily since February this year.

The results come from Hometrack's June survey, which reports a 0.4 per cent increase in average national house prices, down from 0.6 per cent last month.

John Wriglesworth, Hometrack's Housing Economist, said: "While house prices are continuing to rise, there are the first signs that the market may be easing."

He continued: "New buyers have reduced and excess demand has fallen for the first time this year. With the effects of the recent interest rate rise still to feed through, it looks like the market will continue to slow this year."

There are other signs that the market may be on the turn, such as the fact that new buyers have dropped by 0.6 per cent, thereby reversing a previous rising trend.

Additionally, average sales price achieved as a percentage of asking price fell to 96.2 per cent. This ratio had previously been rising, more or less steadily, over the last 12 months.

On top of this, the average time taken to sell a property has risen to 4.2 weeks.

However despite the slowdown, house prices continue to rise across the whole country with all counties reporting rises except for Oxfordshire.

Mr Wriglesworth further added: "We are maintaining our forecast of eight per cent house price rises for 2004, with a further slowdown to four per cent in 2005."

He concluded by saying: "Speculation of a pending housing market crash has no foundation. All the signs suggest that we are heading for a soft landing after the heavy price rises of recent years."