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House prices dip as demand falls

Concerns over looming government spending cuts and the economy are continuing to affect home buyers’ confidence, according to new research.

The typical cost of a house fell by 0.1 per cent during July to £158,700 due to fall in demand, according to property intelligence group Hometrack.

It is the first fall recorded by the index for 15 months, the group said.

And estate agents saw the number of new buyers signing up with them fall by 1.3 per cent, it added.

At the same time, new properties continued to come on to the market, with estate agents reporting a 3.6 per cent jump in the number of homes they had on their books.

The group said the latest fall in demand reflected a trend seen during the past five months, with concern about the economy and talk of impending spending cuts taking their toll on people’s confidence in the market.

The change in conditions, which has seen the market shift from being a sellers’ one to a buyers’ one, has led to the average time a property takes to sell increasing to 8.7 weeks, a level last seen in August 2009.

Sellers are also getting a lower proportion of their asking price, at an average of 94 per cent, down from 94.3 per cent in June.

This measure looks set to continue falling during the coming months, as the easing in the mismatch between supply and demand relieves much of the upward pressure on prices, while increased competition for buyers will lead to sellers having to settle for lower sales prices.