House prices still falling

House prices fell for the ninth month in a row during June, to cost 3.2% less than they did a year earlier, figures showed.

The number of homes changing hands is now expected to slump to levels last seen in the 1970s as the credit crunch continues to take its toll on the market, property information group Hometrack said.

The group said the average home in England and Wales lost a further 1% of its value during June to cost £170,500.

Prices have now slid by 2.5% since the beginning of the year, as the loss of confidence in the property market continues to undermine both activity levels and prices. Overall, prices fell in 84% of postcode districts in England and Wales during the month.

The situation looks set to get worse going forward, with the number of new buyers registering with estate agents falling by a further 5.7% in June to stand 52% lower than at the start of the credit crunch, while the number of unsold properties on the market rose by 1.4%.

Hometrack said more than half of all transactions in recent years had been driven by aspirational movers, rather than those who had to move.

It said these buyers were now sitting on their hands until the outlook for the market became clearer, leading to a sizeable drop in transactions.

It added that the number of homes changing hands looked set to continue falling to reach levels not seen since the 1970s.

The level of their asking price being achieved by sellers continued to fall during June, dropping to just 91.6%, the lowest level recorded since the survey was launched in 2001 and well down on the 95.6% being achieved 12 months ago.

Homes are also taking longer to sell at an average of 10.3 weeks, up from six weeks in June 2007.

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