Better house price numbers mask pain in most of the UK

20.6 per cent overall increase hides North South divide
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The Independent Online

House prices have risen by 0.6 per cent this month, a report from Rightmove suggests today, though the online estate agency warns that lenders' caution and poor stock levels continue to threaten the market.

Rightmove's monthly housing survey, which is based on asking prices on the website rather than on completions, also reveals that the value of properties across much of the UK are continuing to fall. While overall prices in England and Wales have risen during September, only three areas of the country saw gains.

The strength of the market throughout East Anglia, London and the South-East of England was enough to offset weakness throughout the rest of the country, with the North of England, in particular, registering disappointingly lower prices.

Miles Shipside, commercial director of Rightmove, said that the biggest restraint on the market was the high deposits now required by most mortgage lenders, with home loan providers also being very choosy about geography.

"The recession appears to have hit prices harder in the North, and this is compounded by lenders' more conservative attitude to risk," Mr Shipside said. "Lenders quite naturally prefer to lend to lower-risk borrowers in better locations, with better job security, larger deposits and more resilient property values."

Rightmove said many of the estate agents that use its site were particularly concerned about how few properties were coming on to the market, having seen sales pick up during the summer months.

The mixed picture painted by the survey is consistent with other warnings about the outlook for the housing market in the near future.

Figures published by the Council for Mortgage Lenders last week revealed mortgage lending in August was down by a third on the same month last year, prompting renewed concerns that the recovery seen in recent months might not be sustainable. The Ernst & Young Item Club said last week that recent rises in house prices could be reversed in the first half of next year and that prices were unlikely to return to 2007 levels for at least five years.

Mr Shipside added that he believed the market had reached a crossroads. "Confidence is up, stock is down and the number of people searching is high – there are lots of positives, but too few buyers can put down the 40 per cent deposits that are needed in order to secure the best mortgage deals," he said.

"Finance greases the wheels of the property market and it is anybody's guess when we might see the necessary level of competitive funding return."

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