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Last Updated: Monday, 28 June, 2004, 00:53 GMT 01:53 UK
Dip in demand cools house prices
Couple viewing house
With fewer new buyers around demand has slowed, says the report
Falling demand helped dampen UK house price growth slightly in June, the latest Hometrack survey has found.

Average prices grew just 0.4%, compared with a 0.6% increase a month earlier - taking the average price of a property in England and Wales to 152,500.

Prices rose in all counties, except Oxfordshire which saw them dip 0.7%.

But despite the hints of a slowdown, Hometrack said it still expected property prices to rise by 8% this year, before slowing to 4% in 2005.

Among signs that the market was levelling off was a dip in demand from first-time buyers - the first since Christmas, Hometrack said.

'Soft landing'

Meanwhile, the average time taken to sell a property had risen slightly to 4.2 weeks from four weeks in May.

Also the average offer sellers were getting from buyers dipped to 96.2% of the asking price from 96.4% the previous month.

Suffolk - 0.9%
Buckinghamshire - 0.8%
Devon - 0.8%
Gtr Manchester - 0.8%
North London - 0.7%
*SOURCE : Hometrack June survey
But Hometrack economist John Wriglesworth poured cold water on speculation that the market was heading for a crash.

He argued that with interest rates still at historical lows, unemployment at record lows and incomes rising strongly that "all signs suggest that we are heading for a soft landing".

"While house prices are continuing to rise, there are the first signs that the market may be easing," he added.

"New buyers have reduced and excess demand has fallen for the first time this year.

"With the effects of the recent interest rate rise still to feed through, it looks like the market will continue to slow this year."

Rates take effect?

The findings echo a recent report by Rightmove, which suggested the Bank of England's back-to-back rate rises in May and June may finally be cooling the runaway property market.

Further data from the British Bankers' Association and the Council of Mortgage also suggested higher borrowing costs are beginning to have an impact, with mortgage lending slowing in May.

Oxford - 1.4% down
Croydon - 0.2% fall
Warwick - 0.1% dip
*SOURCE : Hometrack June survey
However, recent house price surveys from the main mortgage lenders - the Halifax and Nationwide - have indicated the market is still rising rapidly.

Despite Hometrack revealing a slight slowdown in the market in June prices did continue their rise, with the highest seen in Suffolk (0.9%), Buckinghamshire (0.8%), Greater Manchester (0.8%), Devon (0.8%) and North London (0.8%).

Ipswich led the city hotspots table with a 2.4% jump in prices, closely followed by Middlesbrough (2.1%), Cardiff (1.6%), Milton Keynes (1.3%) and Manchester (1%).

But, while Oxfordshire was the only county to see prices drop, the city of Oxford saw average house prices slip 1.4%.

Prices in Croydon also dipped 0.2%, while those in Warwick slipped 0.1%. Average prices in Guildford, Winchester and Bournemouth were static.


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