January’s survey shows a slow start to the year with an extension of the seasonal slowdown and weak consumer confidence. Both buyer registrations and sales have fallen and the underlying trend is one of tightening supply and weakening demand.
Concerns over the economic outlook and Eurozone crisis have resulted in an 11% drop in demand over 2011 H2 and a 23% decline in buyers registering with agents between August and January.
The supply of homes for sale has contracted by 7% over the last 6 months. Supply has not contracted to this extent since 2009.
Nationally, house prices have not posted a month on month increase since June 2010 (18 months). In January prices remain unchanged.
A small rise in London prices offsets falls in other regions. A trend that looks set to continue through 2012 as the Olympics firmly focus the eyes of the world on London, and overseas buyers, in the midst of global uncertainty, continue to consider London a safe haven.
On a regional basis southern England (excluding London) has seen the biggest decline in demand over the last 6 months, but this has been from a high base.
The average time on the market in the north and midlands stands at just under 3 months (11.9 weeks) - the same as 12 months ago.
In southern England the time on the market is 9.1 weeks - the highest level for almost 3 years. In London the time on the market is 6.5 weeks, lower than the 6.9 weeks average at the start of 2011.
Given the pressure on household finances and the outlook for the wider economy, we expect only a modest improvement in levels of demand in the coming months.
The net effect will be a continued negative balance between supply and demand pointing to further downward pressure on prices in the months ahead.
Commenting on the latest monthly national housing survey, Richard Donnell Director of Research at Hometrack - the property analytics business - said:
“The latest Hometrack survey reveals a market dogged by uncertainty. On a national basis house prices have not increased over the last 18 months (since June 2010) - a theme carried over into January when prices were unchanged.
"A small rise in London offset falls in other regions. London looks set to buck the national trend again in 2012 thanks to overseas buyers providing a boost to prices in London’s prime areas.
"Elsewhere demand remains constrained by the uncertain economic outlook. Some agents have also reported an increase in down-valuations as surveyors exercise growing caution.
"The latest survey of 1,500 agents and surveyors from across the country shows a slow start to the year with an extension of the seasonal slowdown and weak consumer confidence resulting in lower new buyer registrations and sales.
"Looking at the underlying trends a clearer picture emerges of tightening supply and weakening demand.
"Concerns over the economic outlook and the impact of the Eurozone crisis resulted in an 11% drop in demand over 2011 H2.
"Coupled with the extended seasonal downturn, the net result has been a 23% decline in buyers registering with agents between August and January.
"On a regional basis southern England (excluding London) has seen the biggest decline in demand. Here demand has fallen from a higher base than in other areas of the country.
"On the supply side there has been a steady decline in the number of homes coming to the market. This is to be expected as the majority of would-be buyers are also sellers. The supply of homes for sales has contracted by 7% over the last 6 months.
"Supply has not contracted to this extent since 2009.
"Back then a lack of supply under-pinned the price recovery of 2010 which followed the downturn of 2008 and 2009.
"Given the pressure on household finances and the outlook for the wider economy as a whole, we expect only a modest improvement in levels of demand in the coming months.
"The net effect will be a continued negative balance between supply and demand pointing to further downward pressure on prices in the months ahead.
"At a national level the respondents to the survey did not mark prices lower in January. A rise in London prices offset small falls across the rest of the country. In London there is an expectation that the trend set in 2011 will continue, and maybe heightened, by the Olympics.
"While overseas buyers, looking for a safe haven in the midst of global uncertainty, will continue to invest in the capital and the super prime postcodes of central London.
"That said the capital’s housing market is also reliant on domestic demand and it is likely that prices across many areas will continue to underperform.
"The average time on the market provides the clearest guide to the relative health of the housing market at both a regional and more localised level. The average time on the market in the northern regions and midlands currently stands at just under 3 months (11.9 weeks) which is the same as the position 12 months ago.
"In southern England the time on the market is 9.1 weeks, the highest level for almost 3 years as demand weakens and sales periods extend. In London the time on the market is 6.5 weeks, lower than the 6.9 weeks average at the start of 2011.”
"At a city level the markets with the lowest time to sell include Guildford (5.2 weeks), Bristol (5.9) and Milton Keynes (5.9). At the other end of the spectrum the time to sell is greater than 3 months in a dozen locations including Stoke, Newport, Carlisle and Lincoln.”
