The supply of homes for sale continues to grow, albeit at a slowing pace. The growth in supply has outpaced the rise in demand for each of the last three months.
Demand is set to decline further over the summer as the seasonal slowdown begins to kick in. As a result the balance between supply and demand is set to widen, putting further downward pressure on prices.
Headline month-on-month price falls have been avoided due to the relative strength of the London market. London was the only region to register a price increase in June – up 0.3%.
What is becoming clearer from the survey is that the impetus for price growth in regions outside London is starting to fade on weaker demand. Prices were down in seven regions in June compared to three in March.
The extent of price falls jumped in June with 23% of the country registering falls over the month compared to 12% for each of the last two months. The increase has been seen in southern regions outside London.
On a regional basis, market fundamentals, as measured by the time on the market, remain weakest in northern regions where the average time to sell is over 11 weeks. In southern regions the time on market is eight weeks on a rising trend while in London it remains at a recent low of five weeks.
The over-riding story from the 1,500 respondents to the survey is of a fragile, lacklustre housing market where buyers remain concerned by the UK economy and wider Eurozone. This echoes the ‘large black cloud of uncertainty’ comments by Bank of England Governor Mervyn King in his recent Mansion House speech.
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