The Hometrack national June survey of the housing market reports a 0.0% change in house prices. This follows two months of small falls (-0.1% in both April and May).

House prices are bumping along the bottom as the housing market flattens across all parts of the country and supply continues to outpace demand, says the report from Hometrack.

Prices even out over the country

There is evidence that price changes are levelling out across the country: the North has seen more widespread price falls, whereas the South East, which last month saw falls of –0.4%, is this month seeing falls of only –0.1%.

National house prices have been bumping along the bottom since the beginning of the year, with the overall cumulative change being 0.0% since December.

Price falls

Overall, 23 counties reported price falls. The counties seeing the highest price falls over the past month were Wiltshire, Surrey (both -0.3%), West Sussex (-0.2%), West Midlands and Oxfordshire (both -0.1%).

Price rises

Meanwhile, 18 counties reported moderate price rises. The highest rises occurred in Cumbria (0.5%), East Riding of Yorkshire, Mid Wales (both 0.3%), Merseyside and North Wales (both 0.2%). Sixteen counties reported no price changes.

Average house price

• Ten counties with the highest price rises…. Average price is £91,530.
• Ten counties with the highest price falls…. Average price is £178,030.
• The average house price for the country as a whole is unchanged at £135,200.

Regional trends

House price falls have persisted in the South East and Greater London, areas which saw the largest rises during the boom of 2002. In the southern half of the country, only three counties reported positive house price inflation over the month. However, price falls in the south have lessened as price rises in the North have reduced.

In the northern half of the country, stagnation is now widespread with eight counties seeing no change in house prices, and four reporting price falls.

Supply outpacing demand

While the number of new properties listed grew by 4%, the number of new buyers rose by less than 1%. This means that Hometrack’s unique National Demand Index reveals yet further declines in demand relative to supply. With levels of excess demand continuing to fall, further stagnation in the housing market can be expected.

No further price growth in the short term

Prices achieved as a percentage of asking price have now fallen continually for twelve months to 94.3% (last month 94.4%), the lowest for over two years.

On average, it is currently taking over 5 weeks to sell a home with an average of more than 11 viewings per sale. This is well down on the 2.8 weeks to sell and 9.0 viewings per sale recorded at the height of the boom in May last year. These facts point to little improvement in house prices in the short term.

The one piece of good news is the 5% uplift in sales agreed. Potential buyers, previously not committing to house purchase, are now making more realistic offers

John Wriglesworth, Hometrack’s housing economist, comments:

“The national housing market has seen little activity for the past six months now and prices are bumping along the bottom – prices are as flat as a pancake!”

“The South has seen price falls decline and the North has seen price rises decrease – house price stagnation is now more prevalent. As hometrack predicted, the market has truly bottomed out.”

“Activity levels are slowly increasing but demand is still not matching supply. The market is certainly looking more positive, but it will need a kick start to help it out of the doldrums! Lower bank base rates will not succeed in this as there is little potential for more cuts in mortgage rates. The Government should seriously consider reducing the inequitable Stamp Duty tax.”

UK Hot Spots and Not Spots (June 2003)