First House Price Falls Recorded

Monday, July 26 2004

The first fall, of ?0.1%, in the national average house price was recorded by Hometrack this month, confirming recent speculation of a market slowdown.

Hometrack, the UK?s only independent property research and database company, blamed the slide on ?rising interest rates and speculative fears of a housing market crash?.

The areas worst affected by the downturn were London, where prices fell by up to ?0.8%, East Sussex, Northumberland and Berkshire. Areas furthest from London, including North Wales, Cornwall, and Norfolk, bucked the trend by enjoying further increases, as the differential between values in the South East and the rest of the country continues to tighten.

Other signs of negativity in the market quoted by Hometrack include a fall in the average sales price achieved as a percentage of asking price from 96.2% to 95.5%, indicating that the tide is turning against the seller, and an increase in the average time taken to sell a house from 4.2 weeks last month to 4.8 in July.

As a result, Hometrack have reduced their house price inflation prediction for the year?s end from 8% to 5%, saying that the market is ?now approaching its peak?. However, they still do not anticipate a crash.

John Wriglesworth, Hometrack?s Housing Economist, said: ?Further interest rate rises or sabre-rattling speeches from the Governor for the Bank of England could risk an even more marked downturn in the housing market and we urge the members of the Monetary Policy Committee to resist this.?