House prices slip in market 'wobble' seven regions

Click to follow
The Independent Online

House prices in seven regions of England and Wales fell after the 11 September terrorist attacks as the UK housing market ground to a halt.

The worst affected areas were in the south of England, with prices in central London and the City dropping 0.8 per cent, according to a study by the analysts Hometrack.

However, the average price of a property in England and Wales rose by 0.1 per cent and Hometrack said there was little fear of a repeat of the collapse in prices in the early 1990s.

The survey showed that the number of new buyers was falling, the time taken to sell a home had increased and the percentage of the asking price secured by sellers had fallen.

John Wriglesworth, Hometrack's housing economist, said fears of terrorism had combined with worries about a pending recession to knock consumer confidence.

"That has stalled the rising trend in house prices seen over the past five years," he said. "But it is not Armageddon and it is not an abyss."

The housing market, which had been growing at an unsustainable 10 per cent a year, had been hit by the impact of 11 September, he said. "It caused the market to wobble."

The seven areas to suffer falls were central and south London, Surrey, Oxfordshire, Berkshire, East Sussex and North Yorkshire.

In the remaining 75 per cent of England and Wales there were small price rises, with Derbyshire topping the regional table at 0.8 per cent month on month.

Most of the other top-performing regions – Nottinghamshire, Northumberland and South Yorkshire – were in the North or Midlands, indicating that the North-South gap has narrowed.

Hometrack said it was sticking by its forecast of house price growth of 5 per cent next year. This contrasts with estimates of 9 per cent in the current year and in 2000.

Mr Wriglesworth said: "The housing market will prove resilient to September 11 because interest rates are at a 40-year low, unemployment is at a 25-year low and, for the majority of people, incomes are rising at twice the pace of inflation."

The figures are the latest to suggest that the attacks have curbed activity in the UK housing market. The Royal Institution of Chartered Surveyors reported a marked slowdown. Halifax and Nationwide, the two largest mortgage lenders, will publish surveys over the coming days.