House prices fall in November on weak demand

HOUSE prices in England and Wales dropped 1.1 per cent in November from a year earlier, a Hometrack survey showed, as demand fell at the fastest rate since January 2009, forcing sellers to cut prices to secure a deal.

The survey, which asks estate agents and surveyors to give achievable selling prices for different types of homes in every post code in England and Wales, showed the average time on the market also rose to the highest level for 17 months.

Hometrack said it now expected the weak demand but tightening supply to result in prices falling by two per cent by the end of 2011.

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"The seasonal slowdown in the housing market has kicked in a month early," said Richard Donnell, director of research at Hometrack. "This mirrors similarly weak data on levels of mortgage lending announced earlier this month."

The British Bankers' Association said last week that mortgage approvals had fallen to their lowest in more than 1-1/2 years in October, in a sign that house prices will continue weakening.

The survey said the weak demand had put pressure on house prices, with November down 0.8 per cent -- the fifth consecutive monthly decline. The change on the year was down 1.1 per cent, the largest annual fall since December 2009.

Demand for housing dropped by 4.3 per cent in November and the supply of houses coming to the market also slipped, with the number of properties for sale down by 0.4 per cent, the first time in nine months that the survey has registered a fall.

The weakening conditions meant the average time a property spent on the market rose to 9.8 weeks, the highest level for 17 months, and the proportion of properties selling for the asking price dropped to 92.4 per cent, the lowest level 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 retrenchment, are driving the continued weakness in demand," Donnell said.

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

The survey said prices in southern England had come under the greatest pressure after the area enjoyed a stronger recovery in 2009 and early 2010.