A new study shows London was the only location to see a significant rise in property prices across England and Wales in 2011, with the rest of the region remaining in neutral. The Land Registry House Price Index revealed a 1.3% drop in average home prices overall, while London experienced a gain of 2.8%. Analysts acknowledge the stagnation hurt the property industry, but have hope for 2012 and beyond due to a steady increase in lending, low lending rates and a market that is putting downward pressure on prices. The pressure is unwelcome; however, it is hoped the lower prices will spur growth in the market. For more on this continue reading the following article from Property Wire.
Average residential property prices in England and Wales remained unchanged from November to December, the latest House Price Index from the Land Registry shows.
Overall the average home cost £160,384 and prices have decreased 1.3% during 2011. The only region in England and Wales to experience an increase in its average property value over the last 12 months was London with a rise of 2.8%.
The North West saw the greatest monthly rise, up 1.5% while the North East has the greatest annual price fall of 7.1% and the most significant monthly price fall with a decrease of 1.9%.
The most up to date figures available show that, during October 2011, the number of completed house sales in England and Wales decreased by 6% to 55,309 compared to 58,634 in October 2010.
The number of properties sold in England and Wales for over £1 million in October 2011 decreased by 10 per cent to 525 from 582 in October 2010.
The monthly figures now include transaction information including a detailed breakdown of applications by number and type from solicitors, conveyancers and lenders and covers commercial property and land as well as residential property.
‘The consumer will be better informed by being able to see the volume and types of transactions conducted in England and Wales while the property and finance sectors will be able to use the data to assess trends and movements in the property market,’ said Malcolm Dawson, chief executive of Land Registry.
‘This data alongside the information which informs our House Price Index can be used to both examine the market but also to inform the public,’ he added.
Overall it was a dismal year for the property industry according to Peter Rollings, chief executive officer of estate agent Marsh & Parsons. Reacting to the Land Registry figures he said; ‘Stagnant house prices in December and falling transactions capped a fairly dismal year for the national housing market. Economic uncertainty and fears over job losses have reined in home moves in many parts of the country, and undermined prices outside London’.
But he believes that there are indications to suggest that 2012 may be more encouraging for buyers. ‘Mortgage lending has been steadily improving as lenders learn to operate in a more constrained financial environment, and for those with deposits, rates are actually cheaper than a year ago in many cases. With the stamp duty holiday set to expire in less than two months, activity should pick up in the short term as determined first time buyers hurry to complete,’ he explained.
‘While London hasn’t been totally immune from the difficulties facing the wider economy, would be buyers have a greater confidence in the direction of the market. Strong interest from international investors and domestic cash buyers, combined with a limited supply of prime property, has helped property in the capital defy the national trend of house price falls.
‘While the underlying lack of properties coming onto the market may stop activity in the capital from rocketing up, the appetite we’ve seen from buyers in January bodes well for vendors in the coming year. For instance, when the sale of a property in Fulham fell through during the festive period, it received 20 viewings and seven separate offers in the following ten days before selling for £20,000 above its agreed asking price. With such competition for homes in the capital, there’s no reason why price rises will judder to a halt any time soon,’ he added.
No monthly change in house prices doesn’t mean the value of property is staying still. With inflation running at over 4.2% and prices falling on an annual basis, the value of property is falling steadily according to Paul Hunt, managing director of Phoebus Software.
‘But considering the challenging conditions the market has faced, a 1.3% annual fall in prices shouldn’t strike fear into the hearts of mortgage lenders. The property market was subdued in 2011, as nine out of the twelve most recent months reported in the Land Registry figures showed transactions fell year on year and the developing crisis in the eurozone has reduced confidence among buyers,’ he said.
‘That this has caused only a modest price fall is a demonstration of the resilience of the UK property market. Lenders have acknowledged this, offering record low mortgage rates and increasing lending volumes on an annual basis for the last four months for the first time in four years. Although prices are falling, the size of those falls is encouraging when one considers the current strength of the downward pressure on property prices and the willingness of lenders to make finance available to support the market,’ he added.
This article was republished with permission from Property Wire.