House prices fall in region

House prices in the North West fell for the first time in 7 months Photo: PA Images

House prices have fallen for the first time in seven months, with the North West seeing a decrease of 0.3%, as the number of potential buyers shrinks while the volume of homes going on the market rises, a study has said.

The gap between supply and demand is set to widen following an early and unusually rapid seasonal summer slowdown, meaning prices are likely to fall further in the coming months into autumn, property analyst Hometrack said.

Prices fell by 0.1% in July after being flat last month, with activity slowing down notably in London and the South East, which have been supporting the market and keeping average prices up.

Meanwhile, price falls in the northern regions, which have been bigger than those in the South, could be "bottoming out", the study suggested.

London was the only region to register a price increase in July, with a rise of 0.1%, but the rate of growth has slowed, according to the findings. The North East saw the biggest price fall, with a 0.5% drop.

Prices in the North West decreased by 0.3% and those in the South West, Wales, the West Midlands and Yorkshire and Humberside fell by 0.2%, while prices in the East Midlands and the South East dropped by 0.1% and remained flat in East Anglia.

The mismatch between buyers and sellers was shown by the number of new potential buyers registering with estate agents decreasing by 2.1% this month, as the volume of homes being put on the market rose by 1.4%.

The number of new properties for sale has increased by 5.2% over the last three months, while demand has fallen by 2.2% over the same period.

The South East saw the biggest fall in demand in July with potential buyers decreasing by 3.4%, while London also saw an above-average decline of 2.4%.

Richard Donnell, director of research at Hometrack, said: "Weaker demand is to be expected over the summer months, but compared to previous years, the seasonal slowdown has started earlier and developed more rapidly than in previous years. This reflects growing concern over the UK's economy and the deepening eurozone crisis."