The average property price in the UK fell 1.6% over the last month, recording its fifth consecutive monthly fall according to figures released today by the National Association of Estate Agents (NAEA) backing today’s projections from the Bank of England’s quarterly inflation report that there will be “some modest adjustment” in house prices for a period of time.

House prices are now on average 6.05% higher than they were this time last year – the lowest annual rate of change seen since the property boom began.

Buyers returning?

All indicators show that there were slightly more buyers than last month, but still a lower number than in the summer months or earlier in the year.

In addition, the number of transactions remained low demonstrating that although buyers are starting to enter the market again as prices fall, many are unwilling to commit in anticipation of further price falls.

Estate agents across the country are also reporting that only houses with a reasonable asking price are selling, as the average discount from asking price remains relatively high level at around 5%.

There was a slight increase in the number of first time buyers than in the previous two months, but it was still historically a low proportion of 11.43%.

Strong rental market

The relationship between a falling sales market and a rising rental market was illustrated with strong figures from lettings agents indicating fewer vacant properties and higher average rents (up 0.67% in the last month and 3.2% over the last year) as potential buyers decide to rent instead.

Market picking up

Richard Hair, President of the NAEA, comments: “Although we have once again seen further falls in house prices, the indicators are that the market will be picking up again in the New Year. This supports the predictions from the Governor of the Bank of England, expecting house prices to experience some moderate adjustment from the previously high levels."

“Buyers are returning, and although there are not as many sales going through at the moment, once they realise there will not be any further significant falls, the market will pick up.”