House prices cool further

LONDON - Annual house price inflation in England and Wales slipped to its lowest in more than a year in November, a survey showed on Monday, as prices fell during the month.

Property consultant Hometrack said house prices were 3.6 percent higher than a year ago, down from an annual rate of inflation of 4.4 percent in October and the lowest since July 2006.

Prices fell 0.2 percent during the month, compounding a 0.1 percent fall in October, although the figures are not adjusted to take seasonal factors into account.

Hometrack said a combination of higher interest rates and weaker confidence were weighing on the market.

The average time a property stayed on the market rose to 8 weeks from less than 6 weeks earlier in the year. Hometrack predicted this could soon break through a five-year high of 8.1 weeks hit at the start of last year.

In another indication of a slowing market, the proportion of property sales achieving the asking price fell to 93.8 percent -- its lowest in almost two years.

"The Christmas slowdown looks to have started early," said Richard Donnell, Hometrack's Director of Research. "It is hard to see the catalyst for any short term turnaround in market confidence other than interest rate cuts early in the new year."

Hometrack predicts house prices in Britain will rise by just one percent next year as weaker sentiment, stretched affordability levels and tighter credit result in a pronounced slowdown.

However, it notes that the lack of supply coming onto the market should prevent widespread price falls.