The plateau in house prices over recent months was mirrored by house sales in August, which remained almost static across all regions of England and Wales, except for London where sales jumped 22%.
LSL and Acadametrics estimated that the number of houses sold in August was 60,600, 13.7% down on July, when there was an unusually large expansion in sales. This increase has failed to be maintained and the market has returned to its 2009 levels.
August sales were 59% of the long-term average of 103,180, while July sales were 67% of the long-term average for the month.
Nevertheless, the number of properties sold between May to July 2010 was 27% up on the number sold over February to April 2010. This compares to the long-term average increase of 18% over the last 15 years.
As house price growth has remained largely static for the past five months, year-on-year house price inflation has slowed to 7.7% and this downward trend is expected to continue as property price growth fails to match that seen in 2009.
LSL and Acadametrics figures showed that the average price for a home in England and Wales is now £222,454, down 4% on the peak of February 2008.
David Brown, commercial director of LSL Property Services, said: “In the short term, we expect small fluctuations but no significant dip in the wider market. Regional differences may be quite stark as some areas of the country feel the effect of public sector cuts more than others.
“Active first-time buyers are the key to a healthy housing market and most are waiting for more attractive products from lenders before they make a move.”
Brown said that lending and house price growth are unlikely to pick up until the economy improves and eases lending conditions and added: “Lenders and the government must perform a financial balancing act to ensure supply does not begin to pull away from demand.”
Dr Peter Williams, housing market specialist and chairman of Acadametrics, said that the prospect of property price falls depends on what happens in the wider economy of both the UK and US.
He said: “What the overall position suggests is that we will continue to experience a market which is flat. If, however, the economy turns down sharply and interest rates are pushed up, we can expect to see the housing market weaken significantly and even to see the double dip. If, however, the UK economy avoids a dip and growth recovers, the possibility exists of quite strong house price growth, especially if mortgage supply is restored.”
Williams said if this were to happen, then the market could see monetary policy controls introduced to forestall a boom in housing assets, as signalled by the Bank of England.
He added: “In the long term, we could be in new territory with the Bank seeking to take a stronger stance on house prices with the aim of stopping rapid surges in prices. At this stage we simply do not know.”
However, Mark Blackwell, managing director of xit2, commented: “Currently, the house price indices are failing the industry.
“LSL is up. Hometrack’s down. With so many interpretations out there, it’s tough to know which to put store behind.
“Whoever’s right, I think it will be a long old winter as the correction continues to take hold. There will undoubtedly be a north / south divide with prices in the North dropping further than in the South. Values in southeast London will continue to show some real resilience.
“Interestingly, the falls are not just the result of prices tightening; the information coming through our platforms shows surveyors are now coming up with more realistic prices, suggesting more accurate prices at a pre-offer stage.”
