House sales drop fall

A new house price survey has shown that the number of house sales agreed this month has fallen for the first time this year.

18:23 26 July 2004

A new house price survey has shown that the number of house sales agreed this month has fallen for the first time this year.

The Hometrack July survey shows a 0.1 per cent fall in average house prices across the country, with the number of sales dropping 1.8 per cent.

The survey also shows a four per cent fall in new buyers and a rise in the average time taken to sell a house.

Hometrack has reduced its house price inflation forecast to five per cent from eight per cent, saying that they believe the market "is now approaching its peak".

"We still do not anticipate a housing market crash, expecting zero house price inflation for 2005."

John Wriglesworth, Hometrack's housing economist, said: "Rising interest rates and speculative fears of a housing market crash has resulted in falls in house prices across many parts of the country. The largest falls were mainly recorded in the South East and Central Midlands, whereas counties on the outskirts of the country have maintained their upwards momentum.

"We anticipate that a ripple of negative price changes will spread out over wider regions of the UK, as the full effect of the most recent interest rate rises have not yet fed through to the market.

The Bank of England will meet next week to review the base rate of interest, which stands at 4.5 per cent. Last month the committee voted unanimously against raising rates, noting there have been " further tentative signs of a slowdown in the housing market."

However, many analysts predict a rate rise is likely this month to counter fears of inflation.