House prices show little movement

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After three months of rises, property prices across England and Wales remained flat in June.

A rise of just 0.3 per cent in the London area was offset by a 0.1 per cent drop for the month in the East Midlands and the South West and a 0.2 per cent fall in East Anglia, the North East, the North West, the West Midlands and Yorkshire and Humberside.

The number of house hunters seeking new build properties also declined slightly (0.5 per cent) for the first time in five months meaning new homes coming to market outstripped demand.

The small shift has led to speculation that prices may struggle not to fall further over the next six months given the weak economy, the problems in the eurozone and the impact of the Olympics.

Richard Donnell, director of research at Hometrack, which carried out the study, said: “The market continues to remain fragile in the regions away from southern England, where economic growth is more subdued and the balance between supply and demand is less pronounced.”

He said that while low interest rates have helped to support prices, enabling people to borrow more cheaply, “the greatest risks in the short-term stem from the problems in the eurozone”.

Prices also fell by 0.5 per cent year-on-year in June and the greater difficulty faced by borrowers in taking out a mortgage is also likely to have an impact in the coming months.

A Bank of England report last week said that lenders are set to tighten their borrowing criteria further amid the weak economy and borrowing will become more expensive.

People with smaller deposits were predicted to face a particularly tough time trying to find a deal and lenders have already been steadily raising their mortgage rates in recent months.

The Hometrack survey of estate agents and surveyors found that 93.1 per cent of the asking price was being achieved in June, a slight decrease on May.

The study said: “The overriding story from the 1,500 respondents to the survey is of a fragile, lacklustre housing market where buyers remain concerned by the UK economy and wider eurozone.”