The housing market is shrinking at a concerted rate, with fewer houses for sale and less buyers looking for property.
Figures from the National Association of Estate Agents (NAEA) show that the number of house hunters registered at branches fell from an average of 247 in September to 218 in October. It is the third month in a row that the estate agents have reported a fall in the number of people coming through their doors looking to buy a home.
While a fall in buyers before Christmas is normal, the wider trend indicates that mortgage lending restrictions are continuing to impact on demand. The main barrier to purchase for many buyers remains the historically low level of mortgage lending. It is not just buyers that are exiting the market; the average number of properties available for sale per branch fell from 72 to 67 in the month. Again, a decline is expected in the run up to the festive season as sellers are reluctant to move at this time of year.
It is the first time that a fall has been recorded since June, however, and the drop may also indicate unwillingness on the part of some sellers to accept that their asking price has not been met.
In slightly brighter news, the percentage of first time buyers rose from 20% to 23%, a trend that seems out of place given that there is not much evidence of a relaxation in mortgage lending.
The NAEA said it remains to be seen whether this will be a momentary increase or the beginning of a wider upward trend. The average number of sales agreed at branches remained steady at seven in October, a reassuring statistic in the face of a market that appears to be contracting.
"Buyers and sellers are inclined to wait until the New Year when they have more time to commit," said Michael Jones, president of the NAEA.
"But the housing market is also very price-sensitive currently. Many sellers believe that the lack of available housing stock means they can make a sale without lowering the price of their home. However, house-hunters are also confident of a good deal.
"It is reassuring that sales seem stable and we have actually seen a slight increase in the percentage of sales made to first time buyers.
"But mortgage restrictions will need to be eased if we are to see any real increases across the market moving into the early part of 2011."
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