House price falls have begun to ease, supported by the number of enquiries holding firm over the month. The number of national house price indices reporting decreases has slightly fallen. However, this month’s Poll of Polls shows a seventh consecutive fall in house prices
Housing transactions continue to pick up through 2011, with the downturn in house prices showing signs of stabilising. The Bank of England reported that the number of mortgage approvals rose to 47,557 in March – the highest level since July 2010. This is in line with a modest increase in viewings and enquiries over the last few months.
House prices have generally seen only small falls as a result of this increase in activity driven by an increase in seller instructions. However, the number of mortgages approved remains constrained by weak credit conditions, particularly at the bottom end of the market. This all suggests that there has been a gradual improvement in market conditions which is partly driven by a bounce-back from a weak end to 2010.
House price falls have begun to ease, supported by the number of enquiries holding firm over the month. The number of national house price indices reporting decreases has slightly fallen. This month’s Poll of Polls shows a seventh consecutive fall in house prices.
Three of the eight house price and asking price indices tracked in this report show falling values for the most recent month of data, another improvement on last month. However, conditions across the residential property have not stabilised just yet.
Taking into account the timeliness, lag and accuracy of the various indices, the Poll of Polls shows that the average price of a residential property in England and Wales continues to decline, falling by -0.4% over the month to April. This was a slightly less than the pace of decline seen over the month to March.
House prices in England and Wales are now -2.6% lower than they were at the same time a year before, marking the fourth month in a row that has seen the annual percentage change in prices fall. House prices are -10.3% below 2007 pre-recession levels. This compares favourably to the trough of the housing market, when house prices were as much as 17.2% lower in early 2009. Since then, house prices have added an average of £10,209 in value and grown by 6.2% over the period.
Robert Bartlett, Chesterton Humberts’ CEO, comments:
“London remains the only region where house prices are higher compared to last year, with London prices up by 0.3% over the year, supported by a shortage of instructions and strong demand. The growing divide between North and South London house prices reflects the intense international interest in prime Central London property as well as the historic premium put on transport as South London is less well served by the Underground.
“Indications from the Bank of England that interest rates will rise this year are discouraging as economic recovery in the UK depends on rates remaining low, especially in light of the Bank’s recent poor growth forecasts.”
“While the market is stabilizing, homeowners keen to sell should not be swayed by high valuations from estate agents desperate for instructions. Sales are dependent on realistic pricing, this is not the time to hold out for more than the market will bear, especially as sellers will benefit from the same price realities when purchasing their next property,
Douglas McWilliams, Chief Executive of CEBR, comments:
“We are seeing a slow and gradual improvement in the level of mortgage lending which is largely down to the Bank of England keeping rates at a record low for 26 months. However, even though mortgage rates remain lower than before the credit crunch, households are being squeezed on three fronts: lack of access to credit, slow wage growth and low interest rates on savings have all kept confidence low and points to a difficult year ahead for the consumer”.
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