Research by LSL Property Services and Acadametrics showed that house prices in England and Wales rose 0.2% in November, with the average home now worth £224,758, just 3% off the price peak in February 2008.
Average house prices have increased by a very modest 0.6% over the last nine months, while annual house price growth has now slowed to 5.9%. This is down from a year’s high of 10.5% in March and April, and Acadametrics expects it to slow further as the larger gains of a year ago fall out of the calculations.
The research also showed that housing transactions were down 5.3% on November 2009, while the monthly drop of 4.6% in the number of houses sold was the second consecutive month this year when transactions were lower than the equivalent 2009 period.
Acadametrics figures show that, over the last 15 years, the number of transactions in November typically dropped 2.7% on October levels. With November 2010 transactions dipping 4.6%, sales were 63% of the long-term 15-year average of 93,500 homes sold in November.
However, Acadametrics highlighted that the average figures mask significant movements in prices and transactions at local level.
David Brown, commercial director of LSL Property Services, said: “We have now seen prices creep upwards for seven consecutive months and this shows that there is strong demand for properties despite the considerable barriers facing buyers trying to obtain finance.
“The average LTV on a house purchase stands at 57%, which continues to hold back those without sizeable deposits, particularly buyers hoping to get on the ladder for the first time.”
He added that with inflation 1.2% over the Bank of England’s target, an interest rate rise in 2011 will be on the cards and lending criteria will not loosen in the medium term.
Brown said: “Given that growth is marginal, we may see prices begin to fall slightly as these factors take hold, although it’s unlikely that any dip will be dramatic, and the year-on-year drop in transactions is distorted by the end of the Stamp Duty holiday in 2009.
“The market for those with a large amount of spare cash still represents good value, as more and more sellers are coming into the market willing to listen to offers well below asking price. This is stimulating demand, but in a rather disparate way around the country.”
Indeed, regional figures vary greatly.
London has recorded an average annual price increase of 10% in the last quarter, while northern regions have recorded no growth at all. Brown said this gap will increase in the New Year, as spending cuts hit some regions harder than others.
The North has become the first region in England and Wales to record a 2010 fall in house prices on an annual basis. The last time any region recorded an annual house price fall was November 2009.
Dr Peter Williams, housing market specialist and chairman of Acadametrics, said: “The regional data suggest that the North might soon be joined by other regions although we would not want to suggest that every region will follow such a pattern.
“Five of the ten regions are still showing annual growth in excess of 5%, with the West Midlands bucking the trend by recording an increase in the annual rate over the last month, giving further credence to the view that economic recovery is spread unevenly across the country.”
Williams continued: “What is a complex pattern, poses a considerable challenge to the reporting of an average house price across England and Wales because, however statistically correct, a national average will generally not reflect what people experience locally and may merely serve to confuse.”
“Overall, 2010 has seen a flat market but one with some significant regional and local variations of which buyers and sellers need to be aware. Going forward, we expect to see a similar pattern in 2011,” he said.
