Home prices 'at standstill since Northern Rock run'
Monday 17 September 2012
House prices have been stagnant for five years since the run on Northern Rock in September 2007, property website Rightmove said today.
The average asking price of a property coming onto the market stood at £234,858 over the month, fractionally down on the £235,176 being demanded by sellers five ye ars ago.
The stagnation contrasts starkly with the five years from 2002 to 2007, which saw an inflation-busting 55 per cent boom in average selling prices as the market overheated before the sub-prime crisis.
Director Miles Shipside said: "Back in 2007, few would have believed that house prices would still be the same in five years' time."
Although asking prices have been virtually stagnant since the autumn of 2007, in real terms homeowners are actually more than 15 per cent worse off after five years of inflation running above the Bank of England's 2 per cent target. The £235,176 being asked by sellers in September 2007 is equivalent to just £198,345 when adjusted for the rising cost of living in the past five years.
The standstill in the market also disguises big winners and losers, according to Rightmove, with a North-South divide favouring London and the South. New selling prices in London have outperformed every other region over the last five years — rising 18.7 per cent — in contrast with the cash-strapped North.
Mr Shipside said Londoners were "clear credit-crunch winners", adding: "The challenges for the market are considerable in many parts of the country, but they are even greater in the North with its residents having not recently benefited from the same equity gains of their southern counterparts".
Rightmove's findings came as research from Hometrack said the lending drought since 2007 and the increasing number of baby boomers paying off home loans meant the number of people owning their properties outright could exceed those paying down mortgages within two years.
It said: "Taking the recent growth rates for mortgagees and non-mortgagees over the last 10 years and using this as a basis of forward projections, we calculate that by 2014 there will be more people owning their home without a mortgage than with.
"This is a trend set to continue, re-enforced by lack of mortgage availability and households taking advantage of low interest rates to repay debt."
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