House prices fell a further 0.1% in September according to Hometrack?s most recent housing market report. But the survey also shows that house sales have increased over the last month, suggesting that after 15 months of consistent falls, house prices will soon level.
The national average house price now stands at £160,900, down from a peak of £167,700 in June 2004 and down over 3.7% in the past 12 months.
But buyer activity has increased by 5.5% (4.1% in August?s survey) and the more transactions that occur, the more buyer confidence improves.
John Wriglesworth, Hometrack?s Housing Economist, comments: ?House prices are continuing their bumpy path towards more affordable levels, and this has helped buyers come back to the market over the summer.?
While the number of buyers registered has increased by over 20% since the beginning of the year, supply has continued to overshoot with a continued increase in the number of properties coming on to the market. The resulting oversupply means that prices will inevitably continue to decrease at least until Christmas.
In the current buyer?s market, buyers are negotiating larger discounts and have greater bargaining power. Inevitably, this has led to houses taking longer to sell (8.1 weeks compared with just 5.8 weeks in September last year).
?We are still not in recovery mode in terms of house prices, as supply continues to outstrip demand,? says Wriglesworth. ?With buyers still obtaining an average of 7% discount off asking price, vendors have been slow to set prices at realistic and affordable levels?.
But the downward spiral of house prices is not affecting all areas. The country house market is still buoyant and Central London & City, Gloucestershire, West London and West Yorkshire have all seen house prices rise over the last month. The average number of viewings has also increased to 12.4 per sale (up from 12.1 per sale in August?s survey).
?Hometrack believes the present trend of house price falls will end before the end of this year,? said Mr Wriglesworth. Hometrack expects house prices to be down 5% by the end of the year but expects a ?reasonably strong rebound for 2005?.
?While another boom in house prices is not in prospect, a house price crash can clearly be ruled out? Wriglesworth explains.