The housing market failed to fully recover following the end of the war in Iraq last month, figures released today from Rightmove show, and the lack of first time buyers has further held back growth.

Rightmove’s June house price index shows asking prices still rising by 1.3% over the past month but year-on-year house price inflation continues to fall, to 14.0%, compared with 15.6% in May. This is the sixth consecutive month of failing house price inflation.

More properties are now coming off the market than coming on, reflecting a shift in favour of the seller – it having been a clear buyer’s market for the year so far.

However, with very high stock levels – currently averaging 63 per branch as compared with 40 this time last year – we are a long way from the boom conditions of 2002, fuelled by a shortage of available properties, strong purchaser demand and low interest rates.

First time buyers dampen the market

Market activity remains slow, with the pick-up in home-buying expected after conclusion of the conflict in Iraq having been limited in scope. In particular, the absence of first time buyers, who are finding themselves increasingly priced out of the market, has made it difficult to build chains and has proved a dampener on the market.

Properties remain on the market

The slowdown can be seen in the length of time properties remain on the market, which has now risen to 67 days in London and 63 days nationally, from a low this year of 62 days and 57 days in April. These figures are significantly higher than the 47 days a year ago (and even less in London where the boom conditions were particularly marked).

Stagnant in the south

Prices have been stagnant or declined slightly in southern parts of the country (South East –0.5%, South West –0.4%, Greater London –0.2%).

First northern fall

This month for the first time one of the northern regions – where the market has been very buoyant so far this year – has seen a price fall, with Yorkshire & Humberside prices down 1.2%. This may be a sign that the weakness of the southern part of the country is spreading further north.

Flats and maisonettes have seen price falls this month, down 1.4%, while all other property types have risen in value (detached +1.8%, terraced +3.6%).

In London, higher value boroughs, mainly in inner and western parts of the capital, are the worst performers, with Camden down 4.5% and Kensington & Chelsea down 4.4% this month. In contrast, significant rises have been seen this month in Newham (+3.5%), Hounslow (+2.9%), Hillingdon (+2.4%) and Wandsworth (+2.2%).

Rightmove’s commercial director Miles Shipside, says:

“Some of the indicators in the market are positive – in that supply is no longer outstripping demand – but activity levels are far below what we were seeing last year.”

“Stock levels remain very high, and with low interest rates and lots of good mortgage deals it’s still a good time to buy, for both first time and subsequent buyers. Although asking prices are still rising, it’s at a much slower rate than last year and there is lots of scope to do deals with sellers at realistic prices.”

“We’re in a transitional phase in the market as prices cool, buyers bide their time and stock levels start to stabilise.”