Year on year house price growth slowed to -1.7%, and is expected to slow further as 2011 increases fail to match those of a year ago. August transaction numbers are up on July but still well below trend.
Richard Sexton, business development director of e.surv, comments:
“The traditional increase in activity over the summer has pushed up prices, but they remain low compared to last year.
"House sales have picked up over the summer as buyers have taken advantage of mortgage lenders offering better loan-to-value products and loosening lending criteria to lower income buyers.
"But mortgage lending remains painfully depressed, which is hampering the long term rehabilitation of prices. Lack of mortgage finance is stifling demand at the bottom of the market and pushing down annual prices.
"Let’s not forget mortgage lending was at its lowest level for two years back in the early part of the spring, and although the market has seen the traditional summer improvement, it is depressed compared to 2010, when the economy was growing faster and consumer confidence was higher.
“The increase in mortgage lending over the summer was a flash in the pan, and won’t be sustainable in the current climate of stagnant economic growth and restricted credit conditions.
"Banks will be focusing on targeting wealthier borrowers at the expense of first time buyers, who are traditionally the lifeblood of the property market.
"This will choke off demand at the bottom of the ladder and reverberate all the way up the chain, slowing house price growth. On top of that, once public sector cuts begin to bite unemployment will rise and transactions will fall.
"We expect lending and house prices to be subdued over the coming months, particularly on an annual basis, and will only be resuscitated by an improvement in the economy, and in particular the turbulence in the Eurozone."
