The latest monthly survey from Hometrack of over 5,100 agents and property surveyors shows a widening imbalance between supply and demand which is having a growing impact on sales volumes and pricing levels. Demand for housing dropped for the second month in a row falling by -2.2% in August. The company says that this is in part seasonal, but the underlying trend for the last 6 months has been downwards.

Hometrack say that the supply of homes for sale grew by 2.4% in August - well above average for what is typically a quiet month. Over the last 5 years supply has grown by an average of 0.8% during the month of August and that over the last 5 months the supply of housing for sale has grown by 14% while demand has fallen by 2% - a trend that is driving price falls. The extent of house price falls increased over August with prices down across 30% of the country compared to 12% in July and just 2.6% in June.

The proportion of the asking price being achieved dropped in August to 93.5% from the 94% figure recorded in July. Prices fell across 9 regions and were static in Wales. The South East and North West posted the largest monthly decline of 0.5% while prices in London have been falling for 4 consecutive months and declined by 0.4% in August.

Richard Donnell, director of research at Hometrack said: “The UK housing market is in the process of a modest re-pricing that is likely to run for the next 6 to 12 months. This follows a period of 18 months during which prices firmed rapidly on the back of a potent mix of rising demand and a chronic lack of housing for sale. House prices were down across 30% of the country in August with gains in just 3% of the market.”