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House Prices Rise in 11% of UK Regions

Written by on 12 July, 2010

Despite recent figures suggesting mortgages and the housing market were on the up, a study has found that monthly inflation has fallen for the first time in a year. The Land Registry reports that house prices dipped 0.2% in May, the first drop in twelve months.

Research from Hometrack, the property information specialist, has found that since March supply has grown three times faster than demand. 60% of regions have seen a fall in demand in the month of June, with new buyer registrations falling practically to a standstill of 0.1%. London had the largest decline over the month, of -0.9%.

The recovery of the property market is therefore stalling, say Hometrack, as demand is notably slipping. Average house prices grew a tiny 0.1% in June, but the house prices are only rising in 11% of regions – a sad figure compared to the 25% recorded four months ago. Price falls were recorded across 2.6% of the market.

Despite the fall in demand, estate agents were not encouraging sellers to lower their prices; sales are still steadily increasing, with cash buyers and low loan to value borrowers making most of the transactions. Official figures of house prices from the Land Registry show that the average home is now selling at £165,314, an increase of 8.2% from the same time last year. A downward pressure on prices is not likely to occur unless sales begin to decrease, as although there is a growing gap between supply and demand, a good volume of lower value sales is keeping the market going.

With new buyer registrations up just 0.1% yet the number of properties being listed as up for sale increasing by 2.9%, Hometrack suggest that speculation over the changes to Capital Gains Tax under the new government and the abolition of Home Information Packs have helped cause the growth of property supply.

Hometrack did reveal some positive results from their report, finding that the percentage of asking price being achieved has bounced back over the last twelve months, and gone from a low of 88% in February 2009 to 94.3% in June 2010. The length of time that properties are on the market before being sold has dropped, steadily falling since February 2009 and reaching a current time period of 8.4 weeks.

The Bank of England’s latest report supports the findings from Hometrack, as they have found that May showed mortgage lending to have come to somewhat of a standstill. There were 49,815 mortgages approved in the fifth month of the year, lower than the average of the last six months and a big decrease from the peak in November 2009 of 59,338. However, this end of year rush is still put down to buyers getting in before the end of the stamp duty holiday, so is not a fair figure to compare.

Overall the outlook for the housing market is looking less positive, with recent predictions of a dramatic housing boom being rejected with these more realistic forecasts. The monthly report from Hometrack is based on figures from over 1,500 estate agents, and it typically delivers lower housing inflation results than surveys from mortgage lenders and results from the Land Registry. Their results showed that the average house price in England and Wales is up 2.1%, to £158,900. Conversely, a recent report from Halifax found prices were up 6.9% in May after analysing mortgage figures. The most likely cause of change in the markets, Hometrack stated, will be higher interest rates.

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