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.

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……

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).

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%

The average house price in the UK increased by a small 0.4% in November. However in does continue the gradual increase in prices seen by Nationwide recently.

Further the typical home is now 1.6% higher than 1 year ago, with an average house price of £165,798.

Commenting on the figures, Robert Gardner,

Nationwide’s Chief Economist, said:

“House prices have remained surprisingly resilient in recent months, despite the deterioration in the economic outlook. But, with the UK economic recovery expected to remain sluggish well into 2012, house price growth is likely to remain soft, with prices moving sideways or drifting modestly lower over the next twelve months.”

Resilient Property Market

It would seem that the demand for property in the UK still remains subdued, and is in fact reducing over the past few month.

“… many of the factors that underpin the demand for homes have deteriorated further in recent months. For example, the UK economy lost  almost 200,000 jobs in the three months to September – similar to the pace of job losses seen during the depths of the 2008 recession. At the same time, wage growth slowed to 1.7% – less than half the pace of inflation over the same period.”

In this is contrast to the small but significant rises in house prices.

London is again the only region that has seen an increase in average property price over the last 12 months, according to the Land Registry.

Overall in October England and Wales has seen a fall of -0.9% to leave the average house price at £159,999. This further represents a -3.2% annual changes since the same period last year.

Even though London has seen an increase annually, there was actually a fall of -1.6% in October, leaving the average house price at £340,308.

Regionally elsewhere the East has managed to see a 0.7% increase to £173,410, followed by the East Midlands with a 0.4% growth.

However Wales has seen a substantial fall of -3.0% to land with an average house price of £115,923.

The cheapest house prices remain in the North East though at £100,674 – a -1.8% fall in October and -7.2% over the whole year!

The Rightmove.co.uk House Price Index (HPI) for November 2011 sees a remarkable fall in house for sale prices and seller numbers.

The November figures reported a large fall of -3.1% which is in complete contrast to the sizable positive 2.8% rise last month.

This places the average asking price coming to the market at £232,144, down by a massive £7,528 – in just one month.

Unsurprisingly this is the largest monthly fall since December 2007, but more surprisingly the 3^rd largest percentage fall on record.

Seller numbers down

The uncertain economic outlook stemming from the Eurozone is also spooking seller numbers, with listing numbers down 13% on previous months.

This represents the lowest November level since Lehman Brothers collapsed!

Both a downturn in seller numbers and asking prices sends strong early warning signals to any sector reliant on consumer spending.

The Upside is….

As with most negative news there is likely to a be a flip side positive outcome.

With the impact of the Eurozone hitting the market, we are very likely seeing a early start to the normal seasonal slowdown.

This in turn will help to strengthen buyers’ negotiating power allowing  ’Winter bargain opportunities’ for investors fuelled by rising rents and intensifying competition among buy-to-let lenders.

Other key facts:

• The monthly average house price change was 1.2%, placing the average house price at £163,311
• The annual HPI change was -1.8%, however the average is marginally higher than at the end of 2010
• Small signs of a slight pick-up in housing activity reported by the Bank of England lending data for October
• Overall housing conditions are broadly unchanged through 2011.

Commenting, Martin Ellis, housing economist, said:

“The housing market has proved highly resilient in recent months despite the weak economic recovery and the deterioration in the outlook for both the UK and global economies.  Despite these developments, house sales and the supply of properties for sale have remained very stable since late 2010.  The prospect of exceptionally low official interest rates over the foreseeable future is likely to continue to support the market in the face of a very difficult economic climate.  Both prices and activity levels are expected to remain close to current levels over the coming few months.”

However the less volatile quarterly percentage change is down -0.3% and annual change (3 months to October compared to the same period last year) down -1.8%.

These figures continue the very mixed pattern to both the Halifax and other House Price Indices. Halifax has seen:

-       5 monthly rises

-       4 monthly falls

-       and 1 month of no change

Resilience

Generally the economies of the UK, Europe and globally have had a rough time recently with a weak recovery and deterioration in overall outlook.

This has not been helped by the uncertainty constantly dripping out of the Euro zone and the positives and negatives of the Greek crisis.

However the house market has not reacted as volatile as other markets.

Commenting, Martin Ellis, housing economist, said:

“The housing market has proved highly resilient in recent months despite the weak economic recovery and the deterioration in the outlook for both the UK and global economies. Despite these developments, house sales and the supply of properties for sale have remained very stable since late 2010. …… Both prices and activity levels are expected to remain close to current levels over the coming few months.”

Signs of slight pick up?

The Halifax also believe there are some signs of a slight positive change in housing activity in the market.

Although the property sales have stayed within a narrow range of ~70,000, the leading indicator of completed sales has actually nudged up

“The prospect of exceptionally low official interest rates over the foreseeable future is likely to continue to support the market in the face of a very difficult economic climate.”