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House prices drift lower

Nationally demand fell (-1.3%) for the third month in a row, while supply continued to grow (0.8%) albeit at a slowing rate.  Demand is up by 10% over the year to date while supply has grown by 19%.

In London house prices were unchanged (0%) – the first time this year prices have not increased in the capital.  The time on the market – low by national standards – stands at 5.4 weeks.

Levels of price falls across the rest of the country slowed in August. No region reported a price fall in excess of -0.2%.  Prices rose across just 3.6% of the country, while 27.1% of areas registered price falls.

Nationally the time on the market indicator stands at 9.5 weeks but across the north of the country it now stands at 12 weeks – a return to the highs of March 2011.

The number of sales agreed registered an unseasonal increase – up 6.5%. A prolonged period of bad weather together with the Olympics depressed levels of market activity. This delayed demand led to an unseasonal rise in sales in August, albeit off a low base.

Although buyers remain cautious and price sensitive, correctly priced property is selling well and within a reasonable time frame.

Overall the market remains fragile. Thin volumes and a sluggish market, compounded by seasonal and one-off events is reflected in the volatility of this month’s indicators. As the supply/demand balance weakens, we expect to see slow downward pressure on prices over the remainder of 2012.

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