UK house prices remain volatile

Dr Peter Williams, housing market specialist and Chairman of Acadametrics, said: "The average price of a home in England & Wales fell by a tiny -0.1% in March to £222,146 partly reversing the small increase of 0.3% seen in February.

"Over the last 12 months, we have experienced very small changes in the month on month figures, ranging between +0.4% in June and July 2010 and -0.7% in November 2010.

"These small fluctuations in price over the last 12 months sum in total to zero, so that the annual change in prices from March 2010 to March 2011 is 0.0%, coming back from a negative -0.5% in February.

"No change in the average price of a home over a year might be seen as good news in terms of achieving a degree of housing market stability but is, in reality, misleading because, as the LSL Acadametrics reporting has shown, there are very different price patterns occurring across the market in terms of property type, price bracket and location.

"Indeed, even though we are reporting that national average prices are flat, all regions except for Greater London and the South East have falling house prices and within the regions there are hot and cold spots which are anything but static in behaviour.

"There is one special factor that has some impact upon this March release. This is the impact of transactions being brought forward to avoid the new higher threshold for stamp duty on properties sold for £1million or more.

"A new higher band of 5% tax on the value of homes over £1million – a rise of 1% – came in on April 6.

"The estate agents operating in central London and in its more affluent suburbs have been reporting an increase in activity in this price bracket as purchasers seek to avoid paying the increase in tax.

"Unfortunately it is too early in the compilation of the monthly statistics for March for us to report hard facts on this phenomenon."

He added: "Although economic and regulatory uncertainty remains very strong there is some evidence to suggest wider housing market conditions are easing a little.

"The number of higher loan to value products has increased, albeit the volume of lending has not.

"Lenders are now reporting a lack of demand which is probably unsurprising given very low consumer confidence and concerns about the impact of forthcoming expenditure cuts, joblessness and taxation rises.

"That said, not all buyers are in the same position, and the better spread of products now available does suggest that opportunities exist to move forward on a transaction.

"In the March Budget, the government announced measures to give more support to first–time buyers through a First Buy equity loan scheme with builders, and subsequently a `Build now pay later’ scheme of public sector land release also with house builders. The government estimates that there are no less than 1.4 million households, now renting, which aspire to own.

"With no increase in the average price over the last 12 months, it does mean that for some of these households – those which have seen wage rises – affordability has improved and, while interest rates remain low, entry to home ownership is a possibility. However, what action is taken will be conditioned by confidence in a range of factors including, not only interest rates, but the local job market and the future course of local house prices. Little wonder then that our March outcomes are a mixed bag with considerable local variations."

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