House prices fall marginally as property market treads water

The Momentum UK Team 07 September 2012

Property prices remained stagnant in August as potential buyers’ and sellers played it safe, says a leading bank.

The recently released Halifax House Price Index showed that house prices for last month were down 0.4% on July and 0.3% on the previous quarter. The average house price for August 2012 was £160,256, just 0.9% lower than that of August 2009.

The report found these movements to be in keeping with the housing market trends over the last 8 months where ‘little overall change’ was noted, resulting in house prices at a similar level to December 2011.

While house prices have stagnated in recent times, they are significantly down on those measured before the recession. In 2007 the average house price was £199,612, 25% greater than it is today.

Martin Ellis, housing economist at Halifax said:

“Nationally, house prices continue to tread water, as measured by the underlying trend. Overall, there has been little change in house prices so far this year with the UK average price in August at a very similar level to the end of 2011.”

Regional differences

While the national averages show little movement, there are significant regional variations in house prices, according to figures from the Land Registry.

House prices in London are still soaring, with record highs being measured in the areas of Kensington and Chelsea where the average property price is £1.089 million compared to £869,808 in 2008.

Whereas other areas of the UK seem to be facing rapid declines in the prices of their properties such as regions in the North West where the average house price has fallen from £135,988 in 2007 to £109,235 today.

‘Gradual upward trend’

The Halifax report concluded with hopes of a slow but steady increase to house prices as inflation lowers, mortgage approvals rise and unemployment begins to slow.

The number of mortgages approvals was up 7% for the month of July after declining 13% the previous month. Employment has also picked up, with the second quarter of this year seeing the largest increase since July 2010.

Ellis commented,

“A gradual upward trend in spending power, aided by lower inflation, should help to support housing demand in the coming months. Nonetheless, house prices are likely to remain flat over the remainder of 2012 and into next year.”