The Hometrack August survey of the national housing market reports a -0.1% fall in average national house prices for the second month running. Over the last six months house price inflation has steadily reduced from a peak of 0.9% in February.

The average price of a home in England and Wales is now £152,100.

New buyers have fallen by -4% (following a drop of -4% last month). This has not only wiped out the excess demand that has prevailed during the first half of 2004, said the group, but has now created significant excess supply.

Average sales price achieved as a percentage of asking price fell for the fourth month in a row to 94.9%, down from 95.5% in July, and the lowest since September last year. This indicates that the tide is definitely turning against the seller, as buyers are obtaining better deals from the vendors.

Average time taken to sell has risen to 5.3 weeks (up from 4.8 weeks in July, and 4.2 weeks in June).

Largest house price falls this month occurred in Surrey (-0.4%), London – North (-0.4%), London – East (-0.4%), East Sussex (-0.4%) and Berkshire (-0.4%). Overall, 26 counties recorded price falls,

21 counties saw zero price inflation and only 10 saw price rises. The highest riser was North Yorkshire with an increase of 0.2%.

Cities that fared worse this month were Croydon (-1.9%), Brighton (-1.3%), Oxford (-0.7%) and Bath (-0.6%). At the other end of the scale, Newport enjoyed house price rises of 0.4%, while only 7 other towns saw increases (all 0.1%).

John Wriglesworth, Hometrack’s Housing Economist said, "House prices are now very near their peak in terms of affordability and the recent housing boom now appears to be well and truly over."

"Clearly, those areas that have seen the highest rises over the past year are now experiencing the largest falls. We do not, however, expect any housing market crash. Providing bank base rates remain below 5%, present house price levels can be supported. This is being helped by banks and building societies offering mortgages at well over four times individual incomes."

“We see house prices bumping along the plateau over the next 12 to 18 months. Our house price inflation forecasts remain at 5% for 2004, and 0% for 2005.”