Improved buyer confidence is the key to stabilising house price levels says a new study released today.
The monthly national housing survey for May from Hometrack reveals that house prices have fallen for the eighth month in a row, down by 0.5% following a 0.6% fall the previous month.
The figures highlight the ongoing reluctance of households to commit to the market faced with continuing uncertainty.
‘What we referred to last month as the ‘buyers’ strike’ continues with a 6.7% drop in the number of buyers registering with agents during May,’ says Richard Donnell, Hometrack’s director of research.
Meanwhile, the number of homes for sale is rising – over 7% during the last two months and 20% since February.
This growing mismatch between supply and demand explains why prices are falling.
Although Donnell suggests improved buyer confidence is important to evening out prices, he thinks it is likely a growing number of households will need to move over the coming months.
‘The 20% increase in property for sale since February indicates there are households looking to transact. The implication for prices in the short term largely depends on the split between those who ‘have to sell within a certain period of time’ versus those ‘looking to sell at the right price’ which is unknown. The former group will need to be more realistic on achievable prices compared to the latter,’ adds Mr Donnell.
The fall in buyer confidence over the last six months has hit sales, but Donnell does not believe this is a precursor to a major rise in forced sales and large price falls. ‘It seems likely in the short term prices will continue to edge down until they reach a level where buyers are prepared to commit.’