Buyer demand shrivels to a standstill in summer heat
News Category: Industry News
Published: 28-Jun-2010
Demand from buyers is like the weather: drying up.
Since March, supply has grown three times faster than demand, with new buyer registrations grinding to a virtual standstill in June.
This morning, one of the most reliable of the market reports, Hometrack, said that over the last four months, supply has risen by 15% but demand has increased by only 4.9%.
It reports that in six out of ten regions, there were falls in new buyer registrations, with the biggest drop being in London.
National average house prices crept up just 0.1%, but in a number of areas, prices fell.
Cash buyers and low LTV borrowers remain the key participants in the market, Hometrack said.
Hometrack said seasonal factors and faltering consumer confidence may result in demand continuing to fall over the summer.
Richard Donnelly, director of research, said that “very low transaction volumes” are helping to support prices. Transactions did in fact rise in June, by 2.8%, but off a low base, he said.
He said: “Despite our view that demand is set to weaken in the coming months, price falls are only likely to feed through once sales volumes start to fall back. It is when this point is reached that prices will need to adjust to a level where volumes can be maintained.
“The reality is that the scale of any price falls is likely to be limited, particularly in the current low volume market.
“On the supply side, it is clear that the abolition of HIPs has led to an increase in the supply of homes for sale.
“With HIPs no longer in existence, sellers are able to dip their toe into the water without incurring additional costs. One has to question how many vendors putting their homes on the market recently are committed sellers prepared to be flexible on price, and to what extent this increase in supply will impact on pricing levels.”
The survey was based on 1,507 responses from agents in each postcode of England and Wales.
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