Summer slowdown hits house prices

House prices in the UK have fallen for the first time in seven months as the number of potential buyers shrinks while the volume of homes going on the market rises, a study said Monday. The gap between supply and demand is set to widen following an early and unusually rapid seasonal summer slowdown, meaning prices are likely to fall further in the coming months into autumn, property analyst "Hometrack" said. Prices fell by 0.1 percent in July after being flat last month, with activity slowing down notably in London and the South East of England, which have been supporting the market and keeping average prices up. Meanwhile, price falls in the northern regions, which have been bigger than those in the South, could be "bottoming out", the study suggested. London was the only region to register a price increase in July, with a rise of 0.1 percent, but the rate of growth has slowed, according to the findings. The North East of England saw the biggest price fall, with a 0.5 percent drop. Prices in the North West decreased by 0.3 percent and those in the South West, Wales, the West Midlands and Yorkshire and Humberside fell by 0.2 percent, while prices in the East Midlands and the South East dropped by 0.1 percent and remained flat in East Anglia. The mismatch between buyers and sellers was shown by the number of new potential buyers registering with estate agents decreasing by 2.1 percent this month, as the volume of homes being put on the market rose by 1.4 percent. The number of new properties for sale has increased by 5.2 percent over the last three months, while demand has fallen by 2.2 percent over the same period. The South East saw the biggest fall in demand in July with potential buyers decreasing by 3.4 percent, while London also saw an above-average decline of 2. 4 percent. Richard Donnell, director of research at Hometrack, said: "Weaker demand is to be expected over the summer months, but compared to previous years, the seasonal slowdown has started earlier and developed more rapidly than in previous years. "This reflects growing concern over the UK's economy and the deepening eurozone crisis." Borrowers with smaller deposits are expected to have a particularly tough time finding a mortgage in the coming months as lenders continue to tighten their criteria in the uncertain economy, although there have been some recent signs of increased competition to attract those with larger amounts of equity. In a sign of what is to come, figures from the British Bankers' Association (BBA) published last week showed that mortgage approvals were at their lowest level in at least 15 years in June. The Hometrack study said homes are staying on the market for 9.5 weeks on average, a slight increase from 9.4 weeks in June. The proportion of the asking price achieved remained the same month-on-month at 93.1 percent, as weaker pricing in London was offset by increases in the proportion of the asking price being achieved in northern England. The property market is considered an important indicator of the health of the UK economy, analysts said.