Scarcity of buyers breaks the back of Britain’s housing market recovery

Published 28th Dec 2009

A lack of new buyers caused a significant setback for the housing market this month, raising the prospect of further falls in house prices next year, according to Hometrack, the property data company.

In a report being published today, Hometrack predicts a further 1 per cent fall in prices over the next 12 months. Other companies in the property sector shared the gloom. Jones Lang Lasalle was among the most pessimistic, forecasting a 7 per cent fall, while Savills expected a 6.6 per cent drop. Nationwide and Halifax expect the market to be flat, Halifax saying that prices are likely to hinge on the performance of the economy and whether a flood of new properties comes on to the market.

However, the Centre for Economics and Business Research (CEBR), the forecaster, takes a different stand and will reveal today that it believes prices will be 2 per cent to 4 per cent higher by the end of the year, despite concerns about economic recovery and a predicted rise in unemployment.

Ben Read, managing economist, said: “We still expect house prices to be around 15 per cent higher at the end of 2012 than today.”

Chestertons and Hamptons are also forecasting a rise of between 2 per cent and 4 per cent.

Hometrack’s pessimissm came as new-buyer registrations in December dropped 2.2 per cent — the first fall since January. The number of sales agreed also dropped by 0.5 per cent and prices were up in only 11.2 per cent of postcodes, compared with 17.6 per cent in November. In East Anglia, the East Midlands, the North East, North West and Wales house price increases have stalled.

Hometrack says that the housing market was strongest in Surrey and Hertfordshire, where 96.1 per cent and 95.7 per cent of properties were achieving their asking price. The weakest areas were Staffordshire, Lancashire and Mid Wales.

Richard Donnell, director of research at Hometrack, said: “On the basis of the economic outlook and market evidence, we believe it is unlikely that the improved market conditions of 2009 will be replicated in the new year.”

While the prospects for 2010 are uncertain, this year has certainly seen a marked improvement in the property market. Twelve months ago house prices had fallen 9.3 per cent in little more than a year and were still sliding in almost two thirds of postcodes.

With few buyers to be found, transactions were so low that it equated, notionally, to people moving home every 31 years.

Homes lingered on the market for an average of 12 weeks before a buyer could be secured — and then an average discount on the asking price of 11.4 per cent was being demanded.

In contrast to the spreading “turmoil” reported in December last year, “unexpectedly buoyant demand” has proved to be the theme of 2009, according to Mr Donnell. He said: “Over the last year agents across the country registered a 41 per cent rise in demand, while in London this figure reached 70 per cent. In contrast, the volume of homes for sale across the country grew by just 7 per cent.”

He added: “Such major imbalances between supply and demand were bound to have an impact on pricing.”

As a result of the strengthening market, the average price of a house in Britain is now £156,900 — down only 1.9 per cent from last year — and an average of 93.3 per cent of properties are achieving their asking price. The average time to sell a property has fallen to 8.3 weeks.

Source: ' Times '

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