House prices fall again

House prices this month fell for the second month in succession as the market continued to feel the effects of rising interest rates, figures showed today.

Hometrack, a property website, said prices in England and Wales had dipped by 0.1% during the month to August 18 to average ?152,100.

July also saw prices fall by 0.1%, with monthly growth having fallen steadily since reaching a peak of 0.9% in February.

Hometrack said that, during August, the number of people looking to buy a new home fell by 4%, wiping out the excess demand there had been in the market.

At the same time, the level of the asking price sellers achieved fell for the fourth month in a row to 94.9% - the lowest figure since September last year. Homes are now taking an average of 5.3 weeks to sell.

Across the country, 26 counties saw price falls during the month, while prices stood still in 21 and rose in only 10.

The largest falls were seen in Surrey, north and east London, east Sussex and Berkshire, where prices dipped by 0.4%. The highest increase in the cost of property came in north Yorkshire, where prices rose by just 0.2%.

"Recent interest rate rises continue to take their toll on the housing market this month as house prices take another tumble, albeit a minor one," John Wriglesworth, Hometrack's housing economist, said.

"House prices are now very near their peak in terms of affordability, and the recent housing boom now appears to be well and truly over."

However, Mr Wriglesworth said he did not expect to see a crash in house prices. "Providing bank base rates remain below 5%, present house price levels can be supported," he added.

Hometrack expects to see house price rises plateau over the next 12 to 18 months, with prices increasing by 5% during 2004 but remaining static during 2005.