2010 ended on a good note for UK residential property, but heading into 2011, further modest price decline is anticipated. For the year just ended, there were as many price winners as losers by region, led by London while Wales trailed. See the following article from Property Wire for more on this.
UK property house prices unexpectedly posted their first gain in seven months in December as values rebounded from declines, according to the latest index from the Nationwide Building Society.
The average price of a property in December was 0.4% than a year ago at £162,763, the first monthly increase since May. But prices are expected to fall in the first half of 2011 as demand remains weak.
‘Despite December’s increase, house prices have fallen in four out of the last six months and it would be premature to suggest that the recent downward trend has been broken on the basis of one month’s figures. However, the December figures do underscore the fact the current downtrend is only very modest,’ said Nationwide chief economist Martin Gahbauer.
Prices fell 1.3% in the fourth quarter, declining in 10 out of 13 regions, Nationwide said in a separate quarterly report. The declines were led by Northern Ireland with a 3.4% drop, while East Anglia was the best performing area with a 1.6% gain. Values in London decreased 2% during the period.
‘There is little to indicate that buyer demand is set to pick up materially from current levels. As a result, the slow drift down in house prices is likely to persist in 2011, at least for the first half of the year. Whether it continues into the second half will depend on the flow of new property onto the market,’ explained Gahbauer.
Gahbauer warned that house prices could show greater declines if the Bank of England decided to raise its interest rate above its historic low of 0.5% earlier than he expected next year. ‘On balance, a relatively stable picture, with the possibility of a small price decline, appears the most likely outcome for 2011 at this stage,’ he added.
Other indices show prices falling. The latest figures from the Land Registry’s flagship house price index shows that in November prices fell 0.6% to put the average house price in England and Wales at £164,773.
Seven regions in England and Wales experienced increases in their average property values over the last 12 months. The region with the highest annual price change is London with an increase of 6.8%. London also experienced the greatest monthly rise with an increase of 0.4%.
The region with the greatest annual price fall is Wales with a movement down of 3.3%. Wales also experienced the most significant monthly price fall with a fall of 3.4%.
The most up to date figures available show that during September 2010, the number of completed house sales in England and Wales dropped by 6% to 55,068 from 58,430 in September 2009. The number of properties sold in England and Wales for over £1 million increased by 24% between September 2009 and September 2010, from 552 to 686.
Hometrack said earlier this week that prices fell for a sixth month in December and may decline 2% in 2011.
Paul Hunt, managing director of Phoebus Software said that the property market is in better shape than in 2009. ‘Average prices and sales volumes are up year on year and the pace at which prices are dropping hardly represents a house price crash. At the moment, it is the mortgage drought that is causing prices to fall, not a shortage of buyers seeking finance. Although there are some very strong headwinds facing the market in 2011, price growth could return if borrowers’ finances hold up and lenders respond by loosening their criteria, he explained.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.