House sales have fallen as prices also dipped during September according to the LSL Property Services house price index.
It found that transactions fell 24 per cent in September as a knock-on effect of Olympic distraction, while house prices drifted down 0.1 per cent on a monthly basis.
Meanwhile the annual house price increase slowed to 2.2 per cent.
LSP Property Services commercial director David Brown said: “A combination of dipping house prices and falling sales numbers point to a slowing market in September as a lethargic mortgage market and the knock-on impact of reduced buyer activity in August took its toll during the month.
“House prices are still in positive territory this year, and have increased on an annual basis for six consecutive months due to a shortage of properties on the market alongside the ongoing appetite from cash buyers and those with substantial equity. However, the rate of increase is slowing.
“It’s clear that the September housing market was still feeling the effects of the distraction of the Olympics in August, with lower activity and reduced competition in the previous month feeding through into a lower number of sales in September. In fact, transactions fell by 24 per cent, compared to a typical seasonal monthly fall of 9 per cent.
“While we have already started to see buyer activity rebound, the short-term factors hampering September’s performance shouldn’t mask the wider problems the national housing market faces. The lack of lending, especially to first-timer buyers, is choking off first time buyer sales outside of prime London, while uncertainty over job prospects in many parts of the country is still affecting sentiment of many prospective buyers.
“Much hangs on an improvement in the mortgage market. We’ve yet to see enough time elapse to feel a substantial impact from the Funding For Lending scheme in sales prices and numbers, or a boost to activity at the bottom end of the property market.
“However, lenders are confident that it will lead to increased funding for home buyers, and expect credit availability to increase significantly in the final quarter of the year, according to the Bank of England’s latest Credit Conditions Survey. If this is the case and the cheaper finance reaches those waiting to purchase their first home, it could provide a welcome new impetus for transactional activity, and a new source of optimism for would-be buyers.”
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