Annual house price inflation in England and Wales fell in January to its lowest since December 2005, a survey shows today, backing the view that the UK housing market is heading for a sharp downturn.
The average asking price for homes fell 0.8% in January, reducing the annual rate of increase to 3.4% from 4.8% in December, the survey by property Web site Rightmove showed.
The monthly figures are not adjusted to take into account seasonal factors. This was the third consecutive monthly fall but Rightmove said there was evidence of an increase in activity immediately after the New Year, with the number of visits to its Web site up nearly 20% from the first two weeks of last year.
'Some homebuyers are now able to find properties that have fallen into their affordability zone, and are bagging what they see as bargains against previous prices,' said Miles Shipside, Commercial Director of Rightmove.
'Some properties have had their prices dropped by 10% or more and are now within reach, satisfying some of the pent-up demand from previously disenfranchised buyers.'
But it added that much of the monthly price fall was due to the final deadline for sellers to provide Home Information Packs (HIPs) for smaller homes, attracting more cheap properties to the market.
HIPs include a number of legal documents and a certificate rating the property's energy efficiency. They were introduced in the summer for larger properties and from December 14 sellers of homes with two bedrooms or fewer also had to provide them to prospective buyers.
The survey noted the sector would benefit from further expected interest rate cuts and continued action by the banking sector to improve liquidity.
