House prices fall as demand stumbles

Written on:July 30, 2012
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Falling house prices to harm UK economy

Fall in potential house buyers in July, has led to the first monthly shock drop in house prices in England and Wales in seven months, property analyst Hometrack said.

Hometrack reported 0.1% dip in overall house prices in July, following an early and rapid seasonal summer slowdown. The downturn is blamed on the widening gap between the number of potential buyers and volume of homes going on the market.

Richard Donnell, the director of research at the firm, said, “The housing markets of London and the South East – areas that have supported headline price growth since the beginning of the year – are starting to slow as demand weakens and supply rises.”

The survey from the London-based property-research company showed that this week’s UK economy shrank 0.7% in the second quarter of 2012, the most in over three years. London was the only region where house prices rose in July, with a rise of 0.1%.

However, the rate of growth slowed to only 0.1% on the back of a 2.4% fall. The number of postcodes in the capital registering prices falls has started to increase.

According to the reports, the slide continued across the South East, over the month with prices down across 35% of postcodes. Nationally, demand for property fell by 2.1% in July, with the South East posting the greatest fall, down 3.4%.

“Weaker demand is to be expected over the summer months but, compared with previous years, the seasonal slowdown has started earlier and developed more rapidly. This reflects growing concern over the UK’s economy and the deepening eurozone crisis,” added Donnell.

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