28 June 2010Since March supply has grown three times faster than demand
Six out of ten regions see fall in demand during June

By Richard Donnell, Director of Research, Hometrack
Summary Apr-10 May-10 Jun-10
Monthly price change (%) 0.2 0.2 0.1
12 month price change (%) 1.8 2.0 2.1
% change in new buyers registering with agents 1.0 0.5 0.1
% change in volume of property listings 3.7 1.8 2.9
% change in sales agreed 6.3 2.0 2.8
Average time on the market (weeks) 8.3 8.3 8.4
% of the asking price being achieved 94.0 94.2 94.3
% postcode districts with price increase over month 19.4 18.6 11.4
% postcode districts with price decrease over month 2.7 0.8 2.6

Results


  • New buyer registrations ground to a virtual standstill (+0.1%) in June.
  • Six out of ten regions registered falls in new buyer registrations - London posted the largest decline over the month (-0.9%).
  • Growth in demand has been slowing for the last four months. The run up to the Election, pre-budget talk of austerity measures and a continuing lack of mortgage finance have all contributed to market uncertainty.
  • Demand has slowed but property listings continue to grow - rising by 2.9% over June.
  • Over the last four months the supply of homes for sale has grown three times faster than demand - new supply has grown 15% compared to a 4.9% increase in demand.
  • Speculation over changes to Capital Gains Tax and the abolition of Home Information Packs (HIPs) have been the drivers of supply growth.
  • Despite the mis-match between supply and demand, sales volumes are still growing albeit off a very low base. Cash buyers and low loan to value borrowers remain the key participants in the market.
  • Thin volumes are supporting prices despite the changing supply/demand balance. Prices grew by 0.1% over the month. The year on year rate of growth stands at 2.1%.
  • While prices have risen over June, the extent of price rises has declined. Price increases are now limited to just 11% of the market. Price falls were identified across 2.6% of the market.
  • Seasonal factors and faltering consumer confidence may result in falling demand over summer. The upshot could be some modest price falls but low transaction volumes and a lack of forced sellers is likely to limit the scale of any declines.
  • Looking further ahead, higher interest rates are likely to be the primary catalyst for a material change in market conditions.

This month’s survey was based upon 5,712 responses from 1,507 agents and surveyors across all 2,300 postcodes in England and Wales.


chart 1: % asking price being achieved


"The proportion of the asking price has bounced back over the last 12 months from a low of 88% in February 2009 to a current level of 94.3%."



chart 2: Time on market


"The time on the market has been falling since early 2009 from a high of 12.3 weeks seen in January 2009 to a current level of 8.4 weeks."



chart 3: % of postcodes registering price rises


"A decline in sales and new buyer registrations, together with firmer pricing has resulted in a fall in the proportion of areas registering high prices over the last few months. In January price rises were registered across just 7% of the market rising to 26% in February but falling back to 21% in March and 19% in April and May. The proportion has fallen back to 11% in June."