House prices falling faster

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The Independent Online

The rate at which house prices are falling continued to accelerate during October, Government figures showed today.

The annual rate of decline increased to 7.4 per cent during the year to the end of October, compared with a year-on-year drop of 5.1 per cent in September.

Homes lost a further 2.5 per cent of their value during October itself, to leave the average UK property costing £203,539, according to Communities and Local Government.

The figures came as the Royal Institution of Chartered Surveyors (RICS) said the number of homes changing hands had sunk to a new record low.

But interest in property picked up, with the number of househunters rising for the first time in two years during November as steep interest rate cuts tempted potential buyers back to the market.

There was also a slight improvement in the proportion of surveyors reporting price falls, with 76.5 per cent more surveyors reporting a drop in house prices during the month than those who saw a rise, compared with a balance of 81 per cent who saw a fall in September.

The CLG figures showed that all regions of the country are reporting price falls on an annual basis.

Northern Ireland continues to see the steepest declines, with homes losing 20.5 per cent of their value during the year to the end of October, followed by the South West and East Midlands, where prices have dropped by 9.5 per cent.

Scotland has seen the lowest level of price falls, with values dropping by 4.5 per cent during the 12 months to the end of October, while in the North West prices have dropped by 5.6 per cent.

During October itself all property types saw steep price falls, with flats seeing the biggest slump at 3.3 per cent, while detached house lost 3.1 per cent of their value and the price of bungalows and semi-detached homes fell by 2.7 per cent and 2.4 per cent respectively.

Terraced houses were the least affected by the slide, losing 1.1 per cent of their value during the month.

But the housing market downturn continues to be good news for first-time buyers, with people typically paying 9.7 per cent less for their first home in October than they did a year earlier at £146,921.

RICS said many people were seeing the current market downturn as a chance to buy previously unaffordable properties.

The group said 14 per cent more surveyors reported a rise in new buyer inquiries during November than those who reported a fall, the first time interest in the market has been positive since October 2006.

The rise in interest from potential buyers reinforced expectations among surveyors that sales volumes will pick up going forward, although they are slightly less optimistic than they were in October.

But the renewed interest failed to lift sales levels during the three months to the end of November, with chartered surveyor estate agents selling an average of only 10.6 properties during the period, down slightly from 10.9 during the previous three-month period.