House prices drift lower on widening supply/demand balance
Issued: 27 August 2012
| Summary | Jun-12 | Jul-12 | Aug-12 | Change |
|---|---|---|---|---|
| Monthly price change (%) | 0 | -0.1 | -0.1 |  |
| % change in new buyers registering with agents | -0.5 | -2.1 | -1.3 |  |
| % change in volume of property listing | 1.5 | 1.4 | 0.8 |  |
| % change in sales agreed | 7.3 | 1.5 | 6.4 | |
| Average time on the market (weeks) | 9.4 | 9.5 | 9.5 | |
| % of the asking price being achieved | 93.1 | 93.1 | 93.0 | |
| % postcode districts with price increase over month | 10.8 | 7.2 | 3.6 | |
| % postcode districts with price decrease over month | 23.4 | 31.6 | 27.1 | |
Results at a glance
- Average house prices fell 0.1% in August - the same level as in July. The falls are linked to a widening supply/demand balance which suggets further downward pressure on prices in the months ahead
- Nationally demand fell (-1.3%) for the third month in a row, while supply continued to grow (0.8%) albeit at a slowing rate. Demand is up by 10% over the year to date while supply has grown by 19%.
- In London house prices were unchanged (0%) - the first time this year prices have not increased in the capital. The time on the market - low by national standards - stands at 5.4 weeks.
- Levels of price falls across the rest of the country slowed in August. No region reported a price fall in excess of -0.2%. Prices rose across just 3.6% of the country, while 27.1% of areas registered price falls.
- Nationally the time on the market indicator stands at 9.5 weeks but across the north of the country it now stands at 12 weeks - a return to the highs of March 2011.
- The number of sales agreed registered an unseasonal increase - up 6.5%. A prolonged period of bad weather together with the Olympics depressed levels of market activity. This delayed demand led to an unseasonal rise in sales in August, albeit off a low base.
- Although buyers remain cautious and price sensitive, correctly priced property is selling well and within a reasonable time frame.
- Overall the market remains fragile. Thin volumes and a sluggish market, compounded by seasonal and one-off events is reflected in the volatility of this month's indicators. As the supply/demand balance weakens, we expect to see slow downward pressure on prices over the remainder of 2012.
Figure 1"The proportion of asking price achieved has moved down to 93.0%. While the average time on the market remains the same at 9.5 weeks, although there are major regional variations across the country." |
Time on market and % asking price achieved |
Figure 2"The balance between supply and demand leads underlying house price changes by 3 months. The improved balance over the first half of 2011 lead an improvement in the underlying rate of growth." |
Supply demand balance leads price changes by 3 months |
Figure 3"Figure 3 shows the average time taken to sell a property by region. In August the East Midlands recorded the longest time taken to sell - 12.7 weeks, while London registered the shortest time at 5.4 weeks." |
Average time on the market across the regions - weeks |
