U.K. house prices fell for a third month in July and are likely to continue on a “downward trend,” property researcher Hometrack Ltd. said.
The average cost of a home slipped 0.1 percent from June and was down 3.9 percent from a year earlier, the London-based firm said in an e-mailed report today. London prices increased 0.3 percent on the month. In a separate report, Rightmove Plc, the U.K.’s biggest property website, said a growing proportion of consumers expect prices to stabilize over the next 12 months.
Home values have fallen this year as weak demand undermined prices, Hometrack said. While the market is now in “broad equilibrium” and the Bank of England’s key interest rate remains at a record low, prices will remain under pressure, it said. A separate report from Markit Economics showed Briton’s finances weakened in July at the fastest pace since March 2009.
“Almost four years into the downturn, the housing market is showing signs of adapting to a low turnover environment,” Richard Donnell, Hometrack’s director of research, said in the statement. “Despite a general improvement in the balance of supply and demand, headline prices remain on a downward trend and are likely to fall further over the coming months.”
The Hometrack survey showed that sellers are accepting an average 7 percent reduction on asking prices for their properties. The percentage of sales agreed rose 9.6 percent this month after a 10.7 percent jump in June, while the average selling time slipped to 9.4 weeks from 9.7 weeks. In London, the average selling time is 5.7 weeks.
“Both sellers and buyers have become more acccepting of realistic pricing,” Donnell said. “The market has adjusted well to low turnover conditions with the volume of forced sales remaining relatively small.”
According to Rightmove, 41.1 percent of consumers expect home prices to be about the same in a year’s time. That compares with 40.3 percent of consumers in the second quarter and 34 percent a year ago, it said. The report also found that 26.2 percent of people expect higher prices in a year, with 26.9 percent forecasting lower prices.
Markit said today an index of U.K. household finances fell to 34.4 last month from 35.1 in June, citing a survey of about 1,500 people by Ipsos MORI between July 14 and July 18. That’s the lowest reading since March 2009. A reading below 50 indicates contraction. Markit began the monthly study in February 2009.
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