House prices down 1.3 per cent


Click to follow
The Independent Online

There were further signs of deterioration in the housing market today when official figures revealed falls in prices and the number of sales.

The Land Registry said the average price of a house fell 1.3 per cent to £160,384 last month compared to the same period a year ago, although the figure was unchanged from November.

And it also revealed a 6% decline in completions in October, the most recent month for which figures are available, bringing to an end two months of rises. There was a 10% fall in the number of million-pound properties sold.

The figures will fuel fears that the weak state of the economy and banks lending less money were hurting the market.

London, which has been supported by strong demand from overseas buyers, was the only part of the UK to avoid an annual decline in prices, with a rise of 2.8% to £345,298.

The North East saw the biggest annual decline, of 7.1% to £99,464, compounded by a 1.9% fall between November and December. There were also significant annual falls for Wales, the North West and West Midlands, while the South East saw a decline of just 0.2%.

Today's figures come after a study by property analyst Hometrack revealed that house prices have failed to record any monthly increase for a year and a half.

House prices remained flat in January, following a 0.2% decrease in both December and November, the survey of 1,500 agents and surveyors found.

It reported a slow start to the year generally, with 10.5% fewer new buyers registering with agents compared with December, 5.4% fewer properties listed and 14.3% fewer sales agreed.

Howard Archer, chief economist at IHS Global Insight, believes prices will fall 5% in 2012 amid low wage growth, rising unemployment and "major concerns over the economic outlook".

He predicted that banks' ability to lend may be hit by difficulties in money markets but said the squeeze on consumers' incomes should start to ease in the second half of the year as inflation falls, which could help prices stabilise towards the end of the year.

He added: "However, unemployment is likely to rise appreciably further and wage growth looks set to remain muted so the overall environment will still be very tough for households."