"Supply is twice current demand"
Homebuyers dropping away from the housing market are likely to trigger further falls in prices over the next few months.
Difficulties in raising deposits and mortgages are forcing would-be buyers to rent rather than buy – which in turn is increasing the numbers of houses that are not selling and pushing prices down.
The latest figures clearly indicate a shift in supply and demand, says housing market monitor Hometrack in a report for September.
Home buyers registering with estate agents fell 1.6 per cent in August and the falling trend continued with a 2.6% decrease in registrations for September.
Meanwhile, homes for sale in the nine months to the end of September increased at double the pace of demand – with 22% more properties but only 11% additional demand.
Richard Donnell, director of research at Hometrack, said: “The September survey shows a clear shift in the balance between supply and demand in the housing market, with the number of people looking to buy falling for the second month in a row.
“Events in the eurozone, together with pressures on the domestic economy and household incomes are clearly taking their toll on consumer confidence.
“We expect demand to continue to slip back over the final few months of the year. This will compound the gap between supply and demand and suggests a likely acceleration in the level of monthly price falls over the final quarter of the year.”
Hometrack reckons property prices dropped for the 15th month in a row in September, by 0.1%, with the prices falling faster since June than earlier in the year.
Donnell said: “The wider the gap between asking and achieved, the less slack there is to absorb weaker demand. In the short-term we see above average price falls registering in the housing markets in the north of the country.”
Quarterly figures from the Nationwide also disclosed average house prices fell year-on-year.
The building society says during the period, 0.1% was shaved off the value of the typical home, which now costs £166,597.
The Nationwide also pointed out that average UK house prices are almost 10% below their peak in 2007.