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

Hometrack also say that new buyers have fallen by 4% (following a drop of 0.6% last month). This has practically wiped out the excess demand that has prevailed previously according to Hometrack’s unique ‘national demand index.’

Average sales price achieved as a percentage of asking price drastically fell to 95.5%, down from 96.2% in June, and the lowest since February this year. This indicates that the tide is turning against the seller, as buyers are obtaining better deals from the vendors, said Hometrack.

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

The number of sales agreed fell by -1.8% (last month up 1.2%). This is the first fall since January 2004.

John Wriglesworth, Hometrack’s Housing Economist, comments: “Rising interest rates and speculative fears of a housing market crash has resulted in falls in house prices across many parts of the country. The largest falls were mainly recorded in the South East and Central Midlands, whereas counties on the outskirts of the country have maintained their upwards momentum.”

“We anticipate that a ripple of negative price changes will spread out over wider regions of the UK, as the full effect of the most recent interest rate rises have not yet fed through to the market.”

“We have reduced our house price inflation forecast to 5% (from 8%). House prices have only risen by 3.6% so far this year and we feel that the market is now approaching its peak. We still do not anticipate a housing market crash, expecting zero house price inflation for 2005.”

“Further interest rate rises or sabre-rattling speeches from the Governor for the Bank of England could risk an even more marked downturn in the housing market and we urge the members of the Monetary Policy Committee to resist this.”

Largest house price falls this month occurred in Central London & City (-0.8), Northumberland (-0.7), London – South West (-0.7%), East Sussex (-0.7) and Berkshire (-0.6%).

Overall, 16 counties recorded price falls, 17 counties saw zero price inflation and 24 saw price rises. Highest risers were North Wales (0.6%), Cornwall (0.4%), Norfolk (0.4%) and North Lincolnshire (0.3%).

Cities that fared worse this month were Brighton (-1.9%), Reading (-1.2%), Exeter (-1.2%) and Oxford (-1.0%). At the other end of the scale were Coventry and Durham, both enjoying house price rises of 0.4%, followed by Blackpool, Cambridge and Norwich, all seeing 0.3% price rises.

The average National house price now stands at £152,300.