Concerns for UK property market as Land Registry data shows fall in London prices
03-05-2012
 |
Overall house prices in England and Wales fell by 0.6% in March bringing the average selling price to £160,372. On an annual basis prices are also 0.6% below year ago levels.
As usual there was considerable variation on a regional basis. Prices fell 1.8% in London but increased by 5.6% in the North East of England.
But prices in London are still 0.7% higher than a year ago, with the average price now standing at £343,522. While in the North East, despite the big monthly jump, they remain 2.8% below what they were a year ago and are now at £101,676.
Wales also saw a big fall in prices, down 4.1% to an average of £113,036, some 5.5% below their level of the previous year. The most up to date figures available show that, during January 2012, the number of completed house sales in England and Wales increased by 13% to 42,511 compared to 37,584 in January 2011.
The number of properties sold in England and Wales for over £1 million in January 2012 decreased by 6% to 467 from 497 in January 2011.
The Land Registry also reported a slight rise in the number of transactions. Its latest data covers October 2011 to January 2012 and shows an average of 55,661 sales per month, up from an average of 52,363 monthly sales for the same period a year previously.
In January itself, the number of house sales was 42,511 compared with 37,584 in January 2011. In March, the Land Registry reports so far having received over 55,000 applications to lodge property sales, on which it has based its March prices.
According to Nicholas Leeming, business development director at Zoopla, a number of London’s sellers decided to drop prices in February and March in order to keep buyers interested as the prospect grew of either a mansion tax or a new stamp duty threshold being announced in the Budget.
‘As a result, the month on month fall in average prices in London is likely to be a temporary blip, however, the fall will put pressure on annual price growth in London over the coming months. The overall trend of average price falls demonstrates there is still some nervousness among buyers and this is putting downward pressure on prices,’ he said.
‘However, we have found that the majority of home owners are still confident of price rises over the next six months. This confidence will need to be shared among buyers and activity levels will need to rise if we’re to see consistent growth in average prices this year, however, the fact remains that for buyers with healthy deposits and who fit current lending criteria, now is a good time to pick up a bargain,’ he added.
Mark Blackwell, managing director of property data specialist xit2, believes that the situation is only going to get worse. ‘Tougher times lie in wait for the housing market over the next few months. Lending to new buyers will drop sharply this quarter as mortgage lenders struggle to cope with their increased funding costs,’ he said.
‘Up until now, the banks have absorbed increasing costs rather than passing them onto the consumer. That policy has veiled serious underlying weaknesses in the mortgage market and the way it’s funded. Now lenders’ balance sheets are stretched to breaking point, those weaknesses are coming to bear,’ he explained.
‘Lenders have told the Bank of England they’ll be forced ship extra costs onto customers in the form of higher rates and fewer high LTV loans. This will put the brakes on first time buyer activity, and reverberate through the rest of the market,’ he added.
