Average house value dropped 0.8% in November, reports Hometrack, as seasonal slowdown starts a month early

Britain’s housing market continues to weaken, with prices falling for the fifth month in a row in November, according to property information group Hometrack.

The average value of a house dropped by 0.8% month-on-month to £155,000. The new decline came after falls of 0.9% in October and 0.4% in September.

“The seasonal slowdown in the housing market has kicked in a month early, with demand for housing falling at the fastest rate for 20 months,” said Richard Donnell, director of research at Hometrack.

“Concerns over the economic outlook on the back of recent spending cuts, together with widespread expectations that house prices are set for a period of retrenchment, are driving the continued weakness in demand. It is inevitable that this trend will continue as we move into the new year from both a seasonal and sentiment perspective.”

Demand for housing declined by 4.3% this month, the biggest monthly decline since January 2009. However, the number of homes on the market is also set to fall in coming months as vendors reduce asking prices or withdraw property from the market. Hometrack expects this to shore up prices in the second part of next year.

Other surveys also point to a cooling market. On Friday, the Land Registry reported that prices fell by 0.8% in October from September, the largest monthly drop since February last year. Mortgage approvals have hit a 19-month low as a result of weak consumer confidence, low wage increases and tough conditions imposed by mortgage lenders.

Meanwhile, credit conditions for companies have begun to ease, according to the manufacturers’ organisation, EEF – the first improvement in 12 months. Its findings brought hope that industry may be over the worst as far as access to finance is concerned. “However, we are not out of the woods yet,” said Lee Hopley, EEF’s chief economist. “Banks, industry and government need to push ahead with efforts to bring down the cost of borrowing and get credit flowing more freely to those companies that need it.”

At the same time, businesses are preparing for another round of cost-cutting next year, research from Allianz Insurance has found. While more than a third of firms are more positive about next year, two-thirds are planning to make further cutbacks. Some 77% of companies have slashed costs since the start of the recession.

Business: Manufacturing sector | guardian.co.uk