28 January 08House prices slip -0.3% in January

Buyers wait in the wings until outlook becomes clearer

By Richard Donnell, Director of Research

House prices fell for the fourth month in a row in January with average values falling by 0.3%, the same decline as last month. The year on year rate of growth has also slipped back, to +2.3%, which represents the lowest rate of growth since June 2006. Meanwhile, the average time to sell reached 8.5 weeks - the highest level since the survey began in 2001.

But the extent of price falls decreased over January, with agents reporting prices down across less than a quarter (23%) of the country, compared to 30% in December.

Lack of supply continues to support prices...

Underlying prices continue to be supported by a tightening in supply of homes for sale. The survey shows that over January supply fell by 4.6% and that it is down by 10% over the last 6 months.

Demand for housing still exists, but at a price...

Despite lower levels of market activity and weak confidence among buyers, demand for housing still exists 'at a price'. While underlying prices are posting small falls, asking prices are under the greatest pressure. January's survey shows that the proportion of the asking price being achieved has declined to 93.5%, down from an average closer to 96% a year ago.

Looking ahead...

Looking ahead, it is the broader economic outlook that is likely to remain the greatest influence on the market in the short term.