House prices fall as sellers seek to move by Christmas

House prices dropped for the sixteenth consecutive month in November, falling by 0.2% on the previous month as buyers retreated from the market.   

According to housing data firm Hometrack, demand fell for the fourth month in a row, shrinking by 2.2% with Hometrack expecting the trend to continue in the month up to Christmas, as sellers’ keenness to move before the festive period throws the supply and demand balance into negative territory. 

Overall, Hometrack expects 2011 to register the lowest level of housing turnover for 40 years. November saw the number of new property listings fall by 0.8%, while the average time a house spent on the market rose slightly to 9.9 weeks.     

The proportion of the asking price being achieved remained relatively unchanged at 92.5%, but house prices fell in 32% of postcodes.

The greatest pressure was visible in the South-west, East Midlands, Wales and North-west, where prices fell by 0.3% or more in November.

Within London prices remained unchanged for the second month in a row, but the capital is likely to see prices fall over the coming quarter amidst continued turmoil in the financial markets.

Richard Donnell, director of research at Hometrack, said: “The economic and financial backdrop to the UK housing market remains far from positive, but over the last three years the sector has adapted to an environment where low turnover and constrained finance have become the norm.

“House prices have fallen consecutively over the last 16 months but on a year-on-year basis they are down just 2.3%. While demand may have fallen for the last four months in a row there has been no significant acceleration in price falls. This is at odds with consumer confidence which over the same period, has fallen considerably.

“The negative economic backdrop means that only committed sellers are putting their homes on the market and in order to push sales through before Christmas, are aligning prices to meet what buyers are prepared to pay. A weak UK economy, together with turmoil in the Eurozone, has seen a rapid reduction in new supply coming to the market. This is acting as a counter-balance to weakening demand which fell by 2.2% in November.”