The survey, which covers 1,500 agents and surveyors across the country, shows that the housing markets of London and the South East – areas that have supported headline price growth since the beginning of the year – are starting to slow as demand weakens and supply rises.
Says Richard Donnell, Hometrack‘s director of research, “House prices are particularly sensitive to changes in levels of demand. During the first four months of 2012, there was a large rise in the number of buyers registering with agents, especially in Southern England. With this came price rises.
“Now, however, demand is starting to falter across the board. The seasonal downturn has begun, and this, combined with a weakening economy, is impacting on demand for housing.
“Nationally, demand fell by 2.1% in July, following a -0.5% fall in June. Regionally, the greatest decline in demand over July was seen in the South East (-3.4%), with London also registering an above-average fall in new buyer registrations (-2.4%).
“Weaker demand is to be expected over the summer months, but, compared to previous years, the seasonal slowdown has started earlier and developed more rapidly than in previous years. This reflects growing concern over the UK’s economy and the deepening Eurozone crisis.
“Meanwhile, levels of supply continue to grow, albeit at a relatively steady pace. The number of new properties coming to the market grew by 1.4% in July, and by 5.2% over the last three months.
“Over the same period, demand fell by 2.2%. The gap between supply and demand is set to widen over the summer months, and points to further modest price falls through the summer and autumn.
“Prices fell across eight out of ten regions in July – in the North East by as much as 0.5%. London was the only region to register a price increase in July, up 0.1%, but the rate of growth has slowed compared to recent months.
“The number of postcodes in the capital registering prices falls has started to increase, although, overall, there were more areas registering rises than falls in July.
“Price falls in the capital are primarily being seen in outer London, where domestic demand is slowing as sentiment weakens and affordability pressures bite. A similar pattern is being seen in the South East, where prices were down across 35% of the region in July – above the national average.
“Away from London and the South East, headline prices remain under downward pressure. However, there is evidence that price falls may start to slow, as the proportion of the asking price being achieved in northern regions has improved over recent months, albeit off a low base.
“Above-average falls have resulted in prices slowing to a level where sales can take place without the need for large discounts. This suggests some bottoming-out of prices in these regions, which have seen larger price falls than Southern England.
“Nationally the time-on-the-market indicator has increased for a second month in a row, to stand at nine-and-a-half weeks.
“However, the proportion of the asking price achieved has remained unchanged, as weaker pricing in London has been offset by an improvement in underlying pricing in northern England.”
In the Autumn 2012 issue of Re:locate magazine (out September), we'll examine Scotland as a magnet for relocation and inward investment, and consider Oxford’s growing appeal as a relocation destination and centre of excellence.