Uncertainty Dampens Property Prices

Just when property prices have shown some increases, they're once again tumbling under strain from economic uncertainties aggravated by an imbalance in supply and demand. That's what market analyst Hometrack assessed about the property market situation today.

As new buyers for June crept to a near halt with a 0.1% growth in June, property prices likewise took a mere 0.1% increase in the same period despite the boom in property listings of 2.9%. The miniscule price increase has been felt in just 11% of the markets with almost 3% experiencing falling property prices.

Market Declines

The growth downtrend in housing demand over the last four consecutive months clearly paints dim picture with 60% of the country's major property markets taking a tumble in new buyer registrations this month. London saw the most significant fall at 0.9% compared with new registrations in May.

The economics of demand versus supply underpins the dismal property market performance as housing supply has clearly outstripped market demand by a factor of three. Houses on sale were up by 15% over the last three months while demand was up by just 4.9%, as reported by Hometrack.

According to Hometrack's research director, Richard Donnell, uncertainties about the nation's future economic health have put undue pressure to market sentiments. The recent political and economic developments have conspired to mold these sentiments starting with the General Election and the Emergency Budget adding to the market's caution about the future. The lack of mortgage financing support continues to dampen the property markets as well.

Donnell further adds that the Budget and the General Election served to emphasis the extent of the uphill challenge confronting the current administration in creating a healthy balance between public finances and consumer spending. Mr. Donnell opines that "In the coming months we expect market conditions to remain subdued with prices likely to track sideways at best, but with the distinct possibility of small month-on-month falls."

Brighter Prospects

However, Hometrack remains optimistic as the current price drops and a lukewarm market activity are not that serious to warrant a dire prediction. The number of property sales is still increasing though at a very low rate and "As long as agents see sales still taking place, there is no real impetus to reduce pricing. Cash buyers and those purchasing with small mortgages continue to account for a sizable proportion of the market."

The property situation gets a rosier picture at the upscale end of the market. Average property prices in the top 25% saw a 1% increase to £456,983 in June which reflects a humble but healthy 1.1% growth rate for the year as reported by the real estate agency website Primelocation.com.

But while the top 10% of the property market experienced a similarly modest 1.1% rise to £639,536, the high end property sales reflect a more robust growth of 4.1 per cent, doubling the growth rate of the property market in its entirety. The typical asking price of a London house in the top 25 per cent currently stands at £1.1m GP.

For more details, go to estate agents Cheltenham. You can also visit sell house Cheltenham to further your search.