The total lending rose by £0.4 billion – although this was less that the previous 6 months average of £0.9 billion. This was however the end of quite a turbulent year.

Within the overall lending to individuals, that secured on dwellings/property also rose, but by £0.7 billion and this was slightly higher than the previous 6 month average of £0.6 billion. The 3 month annualised rate increase was also up to 0.9% and 12 month figure up to 0.8%.

The gross lending secured on dwellings was therefore reported at £13.0 billion with repayments at £11.4 billion roughly in line with the previous 6 month average.

The number of actual loans approved was pretty much unchanged at 52,939 and those loans for remortgages increased slightly to 32,422.

England & Wales house prices down

The Land Registry House Price Index, seen the one of the most accurate covering all purchases whether via credit or cash, has again shown that in December London continues to buck the trend.

The overall index was totally flat with a 0% change over the month, keeping house prices at an average of £160,384. This does however represent a fall of -1.3% over the whole year.

However the data for London shows a positive monthly change of 0.8%, which means that the annual change now stands at 2.8% and the average price is £345,298.

The number of property transactions has decreased over the last year. In July to October 2010, there was an average of 61,274 sales per month. In the same months this year, the figure was 60,764 sales per month.

Regional & Type of House differences

Not surprisingly the movement in house prices vary around the country and through the variety of housing stock.

UK wide the -1.3% fall was spread with semi-detached house experiencing the smallest fall in value at -0.8%, whereas detached and terraced houses both saw a fall of -1.7%.

Regionally, excluding London, the East and South East where the best performing with only a small -0.2% fall and average price of £177,899 and £206,522 respectively.

The North East was be far the worst affected with a whopping -7.1% fall and an average house price of £99,464.

The North West was second to bottom with a -3.4% fall and average price of £113,204 – however in December it experienced the largest increase of 1.5%, beating even London.

Loans for house purchase was up 4% to 47,000 against October – which represented a 5% increase in value.

Year on Year this represented a 3% rise compared to November 2010 – again representing a 5% rise in value. The total value of the loans was £6.9 billion.

Remortgaging had a similar increase with 31,200 loans, and increase of 6% over the month and 2% over the year. The total value of those loans was £4 billion.

First Time Buyers

With the Bank of England interest rates remaining at their record lows, first time buyers continued to see the proportion of their income accounted for by mortgage payments decline – now 12.2% in November compared to 13% last year and 12.3% in October.

With the overall loans for house purchase, first time buyers took 17,300 loans, worth £2.1 billion.

Mortgage Preferences

Fixed rate mortgages increased in popularity again and now at their highest in more than two years – 65% of all borrowers took out a fixed rate. This might have been spurred by the chances of a increase in interest rates in 2012 increasing.

Repayment mortgages continue to be the preference for the vast majority – 98% of first time buyers (up from 97%), 83% of movers (up from 82%) and 79% of remortgagers (up from 77%).

CML director general Paul Smee commented:

A rise in mortgage lending towards the end of 2011 is a welcome indicator for the industry considering confidence has been weak due to fragile economies both at home and in the Eurozone. We should expect a further increase in first-time buyer activity over the next few months as they push through their purchases to take advantage of the stamp duty concession before it ends in March.

According to Rightmove, the early signs for 2012 shows an increase in search activity – up 27% on 2011 with 44 million property searches.

Rightmove see this partially due to pent up demand due to the continuing lack of mortgage funding. They also believe that Estate agents are marketing the lowest number of properties ever – just 1 new property per week per branch.

Asking prices – a mixed bag

Although only just into 2012, Rightmove has seen initial asking prices up by 1.4% in the first week – although still 0.8% lower than last months figures.

The average asking price is now set at £224,060 and represents a 0.4% increase since January 2011.

2012 – the winners and losers

Rightmove is attempting to forecast who it sees to be the winners and lowers to come in the next year:

· 2012 Winners: deposit-assisted first-time buyers, equity-blessed trader-uppers, savvy buy-to-let investors, some golden-oldies, and those selling properties ‘with a difference’

· 2012 Losers: trapped renters and sellers of ‘average’ homes unwilling or unable to offer a cut-price deal

Miles Shipside, director of Rightmove comments:

Old records are being shattered as search activity is up by a staggering 27% on this time last year. Potential buyers and sellers are looking more often and researching more thoroughly. In areas where there is a lot of property up for sale, buyers are looking hard for properties that tempt them with something really special in terms of value, potential, location or quality of finish. If it doesn’t shout ‘special’ then they are unlikely to overpay for the privilege of buying an average property in these mortgage-constrained times……

Although the average number of sales per surveyor was slightly down at 15.2 from last month, this still represents the best highs since August 2010.

However the sales expectations net balance was a little more uncertain at zero, meaning the future was a little less certain.

The headline net house price balance however remained in negative territory at-16 – although since July 2010 this represents the highest reading (or smallest negative value). What this means is that 16% more surveyors say falling house prices versus those who saw rising housing prices.

The sales to stock ratio, which captures the degree of slack in the market, edged up to 22.5%. Although this is the best reading since last April, as recently as the middle of 2007 it stood above 40%. Significantly, price expectations are still fairly downbeat with the net balance for the next three months slipping from –22 to –24.

Regional

Regional disparity on prices remains with London the only region recording a positive net balance for both current prices and price expectations.

The most negative price balances continue to be recorded in the West Midlands (-47) and Yorkshire and Humberside (-43). Northern Ireland was the next weakest area with a reading of -39. The new buyer enquiries series was positive in most parts of the country although a number of regions have been consistent in registering negative net balances for a number of months now. These include the East Midlands, Yorkshire and Humberside and the South West although in the latter two the falls have been modest

Amongst lots of speculation as to increased rates during 2011 this never materialised and indeed 2012 is starting off with the same low rates. This decision was widely expected as the economy’s strength continues to be in doubt, backed up by concerns in the Eurozone and weak consumer spending.

Furthermore the Bank did not announced any increase in its quantative easing (aka Asset Purchase Programme) which totals £275 billion. The current increase in the programme, back in October 2011, is expected to take until early February to complete.

External Factors

There are a lot of external factors in play at the moment amongst them:

• a sharp downturn in industrial output, announced by the Office for National Statistics in November
• Eurozone interest rates being left unchanged
• reports of some disappointing Christmas Sales
• stagnated growth in the last three months of 2011 (according to estimates from the National Institute of Economic and Social Research), with the last quarter seeing just 0.1% … just enough to avoid a recession.

December was a negative month for Halifax with a fall in prices by -0.9%, ending the final three months of 2011 -0.1% lower than the previous quarter. This leave prices of the average home at £160,063

November was actually a slightly positive month with a growth of 0.3% leaving the average house price very similar to Halifax at £160,780.

2011 “The Turbulent year”

Although Halifax ended the year down -1.3%, and Land Registry was down -1.9% in November, this just continues the turbulent nature of 2011.

With a mixture of rises and falls; Halifax had 6 monthly falls and 5 increases, with 1 month unchanged, it is unsurprising that in essence 2011 was a flat year.

The number of property transactions has also decreased over the last year. In June to September 2010, there was an average of 62,293 sales per month. In the same months this year, the figure was 60,805 sales per month.

Commenting, Martin Ellis, housing economist, said:

“Whilst there was a modest fall overall in prices during 2011 with an annual decline of 1.3% in December, house prices held up well last year in the face of the difficult and deteriorating economic climate and substantial pressure on households’ finances.

“If the UK can avoid recession, we expect broad stability in house prices in 2012. There is, however, considerable uncertainty regarding the prospects for the UK economy which will, to a large extent, depend on how events in the Eurozone unfold. In addition, the extent to which households choose to reduce their debts will also affect growth. As a result, the outlook for house prices is also uncertain.”

London Bucks the trend

Throughout 2011 the fairly consistent view from the major House Price Indices was that London was the one region that had been bucking the overall UK trend.

The Land Registry found that by the end of November London had an annual increase of 1.4% bringing the average house price there to be £342,749 – more that twice that of the UK average.

Other regions have emulated the turbulent nature of the overall economy with varied performance through the year. The North East and North West have seen the biggest annual falls upto November of -5.4% and -4.8% resprectively.

However in comparison it has faired pretty well ending the year up by 1% over the course of 2011. Although not a massive positive move, it does demonstrate that the housing market has at least held it’s own.

The Nationwide statistics for December also report that in December the average price actually fell by -0.2%, leaving the typical home valued at £162,822.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said:

“The 1% rise in house prices recorded over the past twelve months could hardly be described as a strong performance, but against a backdrop of anaemic economic growth and a deteriorating labour market, UK house prices were surprisingly resilient in 2011.

London however continued to buck the regional trend with nearly a 6% increase in prices, closely followed by the Outer Met with nearly 4%.

The largest loser was Northern Ireland with a massive -9% fall, the North West second but with a modest -1% fall.

“There has been less variation than usual in house price movements across the UK regions in recent quarters. Annual price changes in 10 of the 13 regions were clustered in a fairly narrow band between +2% and -2% in Q4. This trend is also evident in the two measures of regional house price variation shown below – the range (the highest rate of annual house price inflation recorded in a region during the quarter, compared to the weakest rate) and the standard deviation (which is a measure of how far price movements in all the regions deviate from the average).

Within that lending, that secured on dwellings rose by £0.6 billion, continuing the steady and slow increase over the last four months.

Gross lending secured on dwellings was £12.6 billion in November (Table B), higher than the previous six-month average of £11.7 billion. Repayments in November were £11.6 billion, higher than the previous six-month average of £11.2 billion.

This puts the total value of lending for house purchases at £7.6 billion, up £0.2 billion, and the amount lent for remortgages at £4.1 billion – which was unchanged from last month.

The total number of loan approvals was little changed in November at 52,854. The approvals on remortgaging decreased to 31,154.

The Rightmove December HPI sees only a 1.5% increase over the year 2011, ending quite an uncertain year pretty unchanged – albeit positive.

The average asking price for December was £223,766 – down -2.7% in the month from Novembers Index.

With RPI still at 5.2% this does actually represent nearly a 4% fall in real terms, but with wages failing to keep in line, affordability is not increased. However low bank interest levels have helped to maintain some sort of balance.

Regional Picture

Regional asking prices obviously differ with key highlights being:

• London tops the list as usual with an average price of £434,871 – yet this is down by -2.2% over the month but up 6.4% across the whole of 2011-12-20
• Second up is the South East with an average price of £289,014 – down -6.2% over the month and just up 1.4% in the year.
• Bottom of the table is the North. Average asking prices here are £141,555, surprisingly up over the month by 0.9% but over the whole of 2011 down by -3.0%