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Written by rosalind renshaw

Increased supply, reduced buyer activity and restricted mortgage availability is bringing about a second dip in asking prices.

The property portal and analyst Home, which tracks virtually all residential properties on the market in the UK, said in a thoroughly cheerless report that average asking prices for homes fell 0.5% last month, with further drops on the way.

Asking prices fell in eight out of nine regions. The only region where asking prices rose (by 0.5%) was the north-east. They fell hardest in Scotland (by 1.9%).

The average time that properties remain on the market now stands at 105 days. Home said price-cutting was “highly prevalent” and added: “It has become clear that the market recovery stalled in April.”

Home, which uses Calnea Analytics, the same company which produces Land Registry statistics, said the “sheer volume of property for sale” is pushing prices down, and also that asking prices are falling in real terms, at an annual rate of 5–6%, when allowing for monetary inflation.

It said: “The pertinent questions now are: how long will this falling market last and how deep will it go?”

Home went on: “During the course of the first price drop, from March 2008 to April 2009, asking prices fell 7.5%. This fall was arrested by extraordinary stimulus measures, bank bailouts and the imposition of the lowest Bank of England base rate in the history of the UK central bank.

“The unprecedented level of intervention in the UK financial markets ‘worked’ for a while – in as much as property prices stopped falling and UK banks are still trading. However, such was the scale of public borrowing required to ‘stabilise’ the system of credit, it was soon clear that this approach was unsustainable.

“The new Coalition Government is now in the very difficult position of huge public debt on the one hand and a floundering economy on the other.”

Home forecast: “House prices look set to fall further over the coming months as over-supply, lower buyer activity and ‘doom and gloom’ across the wider UK economy weigh heavily on the housing market.”


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