House prices fell for the eighth month in a row in May as a 'buyers' strike' continued to grip the market.
Information group Hometrack said the average value of a home in England and Wales slipped 0.5 per cent during the month to stand at £172,200. The drop follows a 0.6 per cent price fall in April and leaves houses costing 1.9 per cent less than they did a year ago, according to the firm. In the West Midlands they were off 0.5 per cent. The average price of a house in the region is now £141,300.
The latest survey highlights the ongoing reluctance of households to consider buying in the face of continued uncertainty.
"What we referred to last month as the 'buyers' strike' continues with a 6.7 per cent drop in the number registering with agents over May, following a 2.8 per cent fall over the previous month," said Richard Donnell, Hometrack's director of research. "While the volume of people registering with agents falls, the supply of housing for sale continues to rise - over seven per cent in the last two months and 20 per cent since February.
"This growing mis-match between supply and demand, particularly over the last two months, explains why the extent of price falls has increased compared to earlier in the year, with 53 per cent of postcodes registering lower prices over May compared to April. Despite this, the actual fall in headline prices was lower in May than April which was reflected in all but one region - the South West where the monthly price fall increased from -0.6 per cent to -0.7 per cent.
"It is too early to say whether the level of monthly falls will now start to moderate as this will require an improvement in demand and sales agreed which are both linked to overall buyer confidence. The current trends in the survey indicate that pricing looks set to remain under downward pressure over the coming months."
The scale of that downward pressure on prices is highlighted by the proportion of the asking price being achieved - this has slipped from 93 per cent to 92.3 per cent over the last month and is now at the lowest level since the survey began in 2001. The survey also shows an increase in the time taken to sell a property which now stands at 9.8 weeks, up three weeks from 5.8 weeks in May 2007.
Mr Donnell said: "Improved buyer confi-dence is the key to any stabilisation in pricing levels although there is also likely to be a growing number of households over the coming months who need to move.
"The 20 per cent increase in property for sale since February does indicate that there are households looking to transact. The implication for prices in the short term largely depends on the split between those who 'have to sell within a certain period of time' versus those 'looking to sell at the right price' which is unknown. The former group of sellers will need to be more realistic on the achievable price compared to the latter group.
"In order to get sizable price falls a large majority of transactions need to be 'forced' sales which are mostly prevalent in periods of rising unemployment and recession. The fall in buyer confidence over the last six months has certainly impacted on transaction volumes but we do not believe that this is a precursor to a major rise in forced sales and large price falls. It seems likely that in that the short term prices will continue to edge down until they reach a level where buyers are prepared to commit."