House prices fell for the third month in a row during September as demand from potential buyers continued to fall, according to new research.
The average cost of a home in England and Wales dropped by 0.4 per cent during the month, with all regions posting price falls for the first time since April 2009, according to property intelligence group Hometrack.
The group warned that the property market was entering a new period of readjustment, which it expects to continue well into 2011.
Richard Donnell, director of research at Hometrack, said: “This is the third consecutive month of house price falls and is part of an on-going re-pricing process which began six months ago in early spring, and which is set to stretch well into 2011.
“A combination of falling sales volumes and lower demand are generally followed by a period during which property is either withdrawn from the market, reducing supply, or where asking prices are reduced to a level where transactions can resume.
“It is a process that can typically take between six and 12 months to work through.”
The recent price falls are being driven by a drop in demand from potential buyers, with estate agents reporting a 2.9 per cent slide in people registering with them during September, the third consecutive month during which new buyer numbers have fallen and the biggest drop since January 2009.
At the same time, the number of homes coming on to the market continued to rise, although at 1.2 per cent the increase was slower than during the previous six months, when it averaged 3.3 per cent.
The group said during the past three months demand from potential buyers had fallen by 6.5 per cent, while the number of homes on the market had increased by 7.2 per cent
Unsurprisingly, this is bearing down on both sales levels and prices. The number of sales agreed dipped by 0.1 per cent during the month, the first fall since January.
Homeowners are now typically getting just 93.2 per cent of their asking price, down from a recent peak of 94.3 per cent in June, while properties are taking an average of 9.3 weeks to sell, which the group expects to increase to 10 weeks over the coming months as the market adjusts.
But Hometrack said reports of falling house prices and weaker trading conditions were discouraging would-be sellers from putting their homes on the market.
It said going forward it expected the supply of homes coming on to the market to slow, limiting the potential scale of price falls during the coming 12 months.
It added that talk of a double dip in the housing market was “overdone”.
Overall, house prices fell in 34 per cent of postcode areas during September, with rises seen in only 2.3 per cent of areas.
The South West posted the largest monthly fall at 0.6 per cent, followed by the South East and East Anglia, both at 0.5 per cent.