A curtain cuts the country with price rises almost exclusively above the line and falls below it says hometrack, provider the UK’s most in-depth housing market survey.

The hometrack national May survey of the housing market reports a 0.1% fall in house prices for the second month in a row. After a year’s steady decline in house price inflation since May’s peak of 2.6%, this is further evidence that the property boom is truly at an end.

The slowdown has been particularly marked in the South East, where price falls have been widespread and twenty-four counties reported price falls. The counties reporting the highest falls were:

• Surrey (-0.7%).
• Hampshire (-0.6%).
• Berkshire (-0.5%).
• East Sussex (-0.4%).
• Essex (-0.4%)

Meanwhile, twenty counties reported moderate price rises and thirteen counties reported no price changes. The highest rises occurred in:

• Staffordshire (0.5%).
• South Wales (0.4%).
• North Wales (0.4%).
• Tyne and Wear (0.4%).
• Mid Wales (0.3%)..

The average house price of the ten counties with the highest price rises is £98,760 whereas the average house price of the ten counties with the highest price falls is £179,360. The average house price for the country as a whole is £135,200.

In a repeat of last month, the housing market has shown signs of embedded weakness in the South and continued growth in the North. From Gloucester in the West, to Kings Lynn in the East, a curtain cuts the country with price rises almost exclusively above the line and falls below it. However, prospects for the North are worsening. Whilst homes remain more affordable there, the market is slowing, with one quarter of the northern counties reporting stagnant prices this month and the others slowing sharply. The gloom continues for the South, with all but one county seeing a fall in prices over the month.

While the number of new properties listed grew by 6%, the number of new buyers rose by less than 2%. This means that Hometrack’s unique 'national demand index' reveals a further decline in demand relative to supply. Levels of excess demand are continuing to fall.

Prices achieved as a percentage of asking price fell again for the eleventh month in succession to 94.4%, the lowest for over two years, although the fall this month was slight. On average, it is currently taking over 5 weeks to sell a home with an average of 12 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.

John Wriglesworth, hometrack’s housing economist, comments:

“National house prices have fallen for the second month in a row and the North-South divide continues. While the stagnation is likely to persist over the next few months, there are clear signs that the market is bottoming out.”

“Price falls in the South have stopped increasing whereas price rises in the North are showing signs of easing. With the Iraqi war over, there are some signs of increasing housing activity which will help support house prices in the latter half of the year. We continue to forecast 4% national house price rises for this year for the country as a whole.”