UK property sales up as prices fall

October has seen UK property prices fall to the lowest level for two years, a new survey has announced. Reductions on properties that have been on the market for some time have been blamed for the decrease. The monthly national survey by Hometrack reports a year-on-year price deflation of 0.4%, the lowest rate since October 2010. Following rosy economic announcements from the government last week,  it is tempting to mark the figures as proof that the UK is making real inroads out of recession.

However, analysts say the deflation was predominantly down to sellers lowering asking prices on homes that have been on the market for some time and failed to attract buyers, rather than a fall in demand.

The lowered prices of old housing stock meant there was a 9.2% increase in property sales for the month from one year previous. Asking prices and achieved prices have become closer over the last six months, with an overall 0.1% decline.

In a statement, Richard Donnell, Hometrack’s director of research outined  the future of housing in the UK, saying “The foundation of any national and sustainable recovery in the housing market rests on growth in the wider economy and household incomes”, adding that, “Demand for homes is likely to slow down in the run-up to the year-end with agents looking to push through as many sales as possible.”

The Funding for Lending scheme, introduced by the government in August, appears to have not yet made any impact. The programme is designed by the Bank of England to incentivise mortgage lenders and boost credit growth.