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House prices see third quarter dip

The annualised rate of growth for each month’s data and is less volatile than the individual indices themselves. Annualised rate of growth is the change in value that would be registered if the monthly rate of change were maintained for a full year. House Price Watch also regularises this data over three and six month periods, providing a less volatile representation of market trends than individual monthly snapshots.

The annualised average rate of growth for September stands at 0.9% with the three and six month annualised rates of growth showing -2.6% and -0.3% respectively.

Stuart Law, Chief Executive of Assetz, said:

"Several of the indices reported sharp price falls in August which has had the effect of bringing down price growth in the third quarter. Nonetheless, prices are down only 0.7% annually and up 1% since January and we still expect to record positive growth for 2011. However, there is a possibility that prices could fall back further given that we are seeing a very stable market overall with small changes both up and down. Our previous prediction of 5% growth this year is no longer tenable given the limited progress made in the first three quarters, due to the impact of the Government’s austerity measures and the ongoing Euro-zone crisis. Unemployment, however, has not impacted on growth to the extent that was expected by many commentators as it remains at a level well below that forecast.

“The recent decision by the MPC to inject £75 billion into the economy and the Bank of England’s belief that inflation will fall back over the medium term, minimising the risk of interest rate rises, is good news for property buyers and investors. Savers who are staring into the abyss in terms of returns from bank accounts are increasingly likely to turn to more stable investments, such as buy to let, which is generating a solid cash flow for investors as rents continue to rise to record levels. This continued flight of capital into bricks and mortar will underpin long term house price growth with prices expected to remain flat in 2012.

“We continue to see huge numbers of income-starved investors entering the UK buy-to-let market for the first time, attracted by its stability and surety of income.”

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