Hopes that the housing market has emerged from slump may prove premature, after a leading indicator of house prices suggested fresh weakness ahead.

The median discount on houses sold at auction compared with their value in the conventional market rose to 18% in July from 13% in June and 11% in May, research published today shows.

The second consecutive month of increasing discounts on auction properties could point to a further downturn in house prices.

Auction prices should provide an early warning sign of changes in house prices because most sales close within a day and many sellers are under pressure to dispose of properties, providing a “mark-tomarket” value of what properties are worth.

Financial Times

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