Property market: Green shoots of recovery?

Has the market slump finally bottomed out? Jonathan Christie takes the nation's property temperature in 10 key areas
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The Independent Online

Britain's property market has shown flickers of warming up in recent weeks, according to optimistic estate agents and industry insiders. But do these talked-up figures really reflect the actual experience of buyers or sellers struggling to move, and is the temperature of the housing market across the country really rising?

Let's start with some good news. The Nationwide and Halifax both reported that British house prices had risen last month (1.2 per cent and 2.6 per cent respectively) making the average house now worth around £154,000. Also, the Royal Institution of Chartered Surveyors has announced that new buyer enquiries increased for the seventh month in a row. Hometrack said there had been a rise in house sales and the Bank of England stated that May saw a rise in mortgage approvals. Indeed, some regions of the UK have had house price increases over the last 12 months, such as Windsor (9 per cent), Pembrokeshire (5.8 per cent) and Middlesbrough (2.7 per cent)... very positive.

But let's not get carried away. Other reports state that the overall annual rate of decline is still around 12 per cent, mortgage lending is down 50 per cent on last year – to its lowest level in eight years – and despite near-zero interest rates, the average first-time buyer still needs to put down a 25 per cent deposit as lenders keep the reins tight. The Nationwide have also just increased their mortgage rates, with others expected to follow suit, adding further pressure to an already-fragile market.

Price predictions made at the beginning of 2009 also make for gloomy reading. Savills indicated an 11 per cent drop and are sticking to their guns, while Capital Economics forecast a 20 per cent drop which they have recently revised to 10 per cent in 2009, 7 per cent in 2010 and a possible 5 per cent drop in 2011. There's a feeling that, like the early 1990s, small increases one month will see a fall the next. This fear, coupled with rapidly-rising unemployment and the continuing limited access to credit, leads many to expect further price falls.

So what does that mean for the coming months? "The autumn market will be crucial, with the million-dollar question being when will the mortgage markets come back?" says Lucian Cook, Director of Residential Research at Savills. "Confidence in jobs and earnings play a part, but there's currently a lack of new stock coming through and that needs to change if this is to be a sustained recovery.

"At the moment we are bouncing along at what appears to be the bottom of the market and many people are applying the principle that further falls won't top 5 per cent. The herd mentality of seeing other people enter the market has bolstered buyers' confidence and helped get a greater degree of stability, suggesting the worst falls are over."

This summer may see the normal seasonal downturn, but all eyes are now to the autumn. Lee Bramzell, the chief executive of independent homes barometer, can see positive news ahead. "People have been living with the knock-on effect of Northern Rock for 18 months now and are beginning to understand where they are," he says. "They also have compelling reasons to move, be it larger or smaller families, job losses, relationship splits ... they have a need to move on. The market has bottomed and we're seeing a rise in activity but the days of fast returns from property are over."

In amongst this mish-mash of figures there seems to be a general belief that any improvement in our property climate will be incremental and depends on a precarious balance of credit, jobs, earnings, supply, demand and individual circumstances. No surprise there then, but a new pragmatism has also entered the equation that was lacking during the frenzied peak of 2007. The market may not be hotting up, but the forecast ahead certainly looks milder.


Price drop 08/09: -11.3%

The whole of Dorset is still watching its prices heading south and worst hit is Weymouth. The cheapest place in the county it saw average house prices drop a further 16 per cent this year to £182,000. The West Country's 'hot-spot' days are over with Devon, Dorset and Somerset all suffering double-digit falls in the last year.

Temperature: Still nippy

Barking & Dagenham

Price drop 08/09: -13.5%

On average Barking & Dagenham is the cheapest place to live in the capital (£177,000), and it's getting cheaper. The twinkling towers of the nearby City remind you of the contrasts. Prices there have risen 20 per cent this year highlighting that an area with a troubled industry can still thrive, while a region that's lost its industry struggles to find buyers.

Temperature: Hyperborean

Tunbridge Wells

Price drop 08/09: -14%

This commuter haven has rallied recently with average selling prices increasing four per cent to £268,000, making it the only region in Kent to be on the up. Top performing schools and classy shopiing seem to have wooed buyers here, unlike nearby Sevenoaks where prices have fallen by 25 per cent.

Temperature: Warming up


Price drop 08/09: -8.1%

Despite an annual drop in prices, healthy sales (329) so far in 2009 have made Southend one of the few places in Essex where the market is growing. It bucks the trend in East Anglia where most areas are struggling to stem heavy first quarter falls in 2009 such as Forest Heath in Suffolk (17.2 per cent) and the chi-chi North Norfolk (17 per cent).

Temperature: Mild and fair


Price drop 08/09: -12.1%

Average prices peaked here back in 2007 at just under £130,000. This has now slumped to £84,000, a drop of 35 per cent. Hull enjoyed a rush of investment buoyant by rentals around the university but the recession has hit hard. And, at the other end of the A1079, York is watching its prices rise by three per cent, showing how localized this downturn is.

Temperature: Chilly


Price drop 08/09: -19.9%

Lord Mandelson's former constituency is finding the going tough at the moment. Sales are low (only 136 in the first quarter of this year) and prices are still falling heavily. The average house has come down around £40,000 since 2007, a drop of 30 per cent and to rub salt into the wound, nearby Middlesborough's prices have risen 5.5 per cent this year.

Temperature: Brass monkeys

Blaenau Gwent

Price drop 08/09: -15%

With the lowest average house price in the country (£79,000), this region should present buyers with some bargains but prices here haven't stopped falling (11 per cent in 2009) and sales are very low. In stark contrast it borders Torfaen, an area enjoying an annual rise of over four per cent.

Temperature: Frost in the valleys

Kensington & Chelsea

Price drop 08/09: -31.5%

This area's dramatic annual plunge eclipses every other London borough, yet it still has the highest average price (£862,000). This microclimate of the super-rich may have dropped over 20 per cent in January to March of this year, but it still remains unobtainable for the average buyer. Only Barnet, Camden and the City have risen in the last 12 months.

Temperature: Positively polar


Price drop 08/09: -20.7%

One of the Britain's smallest counties has had some of the fewest sales this year, a paltry 68 in the first quarter. Neighbouring Lincolnshire, and Northamptonshire are looking up with small single figure drops during the last few months but ailing Rutland is still plummeting at a rate of 25 per cent this year.

Temperature: Freezing

Greater Manchester

Price drop 08/09: -9.8%

Manchester's size makes some of it's figures impressive with the highest amount of sales (3,554) after London (9,679). But there's also a glut of flats and new-builds sitting unsold creating a stagnancy that translates into continuing falling prices. They've dropped 2.7 per cent over the last few months with the average house here costing £137,000.

Temperature: Blowing hot and cold