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Early start to festive property market slowdown

Early start to festive property market slowdown

Category: Mortgages

Updated: 29/11/2010
First Published: 29/11/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The seasonal slowdown in the property market has kicked in a month earlier than usual, new research has revealed.

Demand for housing fell at its fastest rate for 20 months in November, according to Hometrack, keeping house prices under downward pressure.

A sizeable dip in demand was attributed to faltering consumer confidence, while an early start to the traditional festive market slowdown also played its part.

Demand for housing dropped by 4.3% in November, the fifth monthly fall in a row and the largest single monthly decline since January 2009.

Meanwhile, the number of properties for sale fell by 0.4%, the first drop recorded in nine months.

The property research firm predicts that prices will remain under downward pressure in the near term, and has forecast a 2% drop in property values by the end of 2011.

The weakening market conditions have resulted in the average time a property spends on the market rising to 9.8 weeks, the highest level seen for 17 months.

In addition, the proportion of the asking price being achieved by sellers has dropped to 92.4%, the lowest level reported since September 2009.

"Concerns over the economic outlook on the back of recent spending cuts together with widespread expectations that house prices are set for a period of re-trenchment, are driving the continued weakness in demand," said Richard Donnell, director of research at Hometrack.

"It is inevitable that this trend will continue as we move into the New Year from both a seasonal and sentiment perspective."

However, despite the decline in demand over recent months, Mr Donnell said house prices had not fallen to the same degree as they did in 2008 and 2009, when prices had been falling off a higher base.

"The rising supply of homes for sale over the last six months has played its part in pushing price growth into negative territory," he added.

"While it is early days, the supply/demand balance looks set to change in the coming months as we see the number of homes for sale begin to fall.

"Over the coming months, estate agents will be turning their attention to the supply of homes on their books anxious to adjust stock levels to realistic prices more closely aligned to demand.

"The reality is that in the months ahead vendors will either need to reduce prices or withdraw property from the market."

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