Drastic Change in London Housing Prices

House prices dived by 2.7% during August, figures showed.

The average cost of a home dropped to £211,410 during the month, driven down by a 5.1% fall in the value of flats and a 3% slide in the cost of terrace houses, according to Communities and Local Government.

Across all buyers, a total of just 42,200 mortgages worth £6 billion were advanced for house purchase during August, both new record lows.

Gross lending for the month, which includes all types of mortgages, totalled £19.7 billion, a 20% fall compared with July’s figure and 42% below the sum advanced in August 2007. It was also the lowest monthly level since February 2005.

The Royal Institution of Chartered Surveyors said its members had sold an average of just 11.5 homes during the three months to the end of September, the lowest level since its survey first began in 1978.

The situation is even more severe in London where estate agents have made an average of just eight sales during the period.

At the same time, the number of surveyors reporting house price falls during September also increased for the first time since April.

Overall, 84.2% more chartered surveyors reported seeing further price slides during the month compared with those who saw price rises, up on the figure of 81.8% more who reported falls in August.

Figures from CLG showed that house prices lost 3.4% of their value during the year to the end of August, after the annual rate of house price inflation fell for the 10th month in a row. The fall is far less severe than the drop of 12.4% recorded by both Halifax and Nationwide for the year to the end of September, but the CLG figures tend to lag other indexes, and further steep falls are expected in the months ahead.

As a result, estate agents Kinleigh Folkard & Hayward predict the number of property transactions will be halved this year, down from 1.2 million sales recorded by the Land Registry for 2007.

Kinleigh’s own exchange results for September 2008 revealed the average selling price in London was more than 14 per cent less than the average asking price.

This is despite having already fallen 10% over the last year.

Kinleigh predicts that property values will fall by a further 4 to 5 per cent by early next year, with little movement in values expected throughout 2009 and 2010.

Watts added: “People will always need to move, and as we progress into 2009, I predict we will see a change in the supply:demand ratio for property, and albeit slowly, with increasing levels of activity and transactions as the year progresses.

“In 2009, I suggest that we will see a 15 per cent increase in UK sales transactions compared with 2008.

“Based on my forecast that there will be 600,000 sales transactions in 2008, this reflects a total of 690,000 transactions in 2009 – still 44 per cent less than in 2007.”

The UK average house price fell by 3.4 per cent in the year to August 2008, down from a fall of 0.3 per cent in the year to July 2008. Between July and August there was a fall of 2.7 per cent in the prices index of properties bought compared with a rise of 0.5 per cent over the same period last year, resulting in a decrease in the annual rate. The fall in UK prices between July and August 2008 can be attributed to decreases in average prices for flats (5.1 per cent), terraced houses (3.0 per cent), bungalows (2.2 per cent), semi-detached houses (1.8 per cent) and detached houses (1.6 per cent)…

The latest UK house price index statistics produced by Communities and Local Government were released on Tuesday 14 October 2008. The latest statistics release includes data based on mortgage completions during the month of August 2008.

The key points from the release are:

UK house prices were 3.4 per cent lower than in August 2007.
The mix-adjusted average house price in the UK stood at £211,410 in August 2008 (not seasonally adjusted).
UK house prices fell by 2.4 per cent in the quarter ending August 2008. This compares with a fall of 0.2 per cent for the quarter ending May 2008.
Annual average house prices increased in Scotland (+1.3 per cent), but fell in England (-3.4 per cent), Wales (-4.3 per cent) and Northern Ireland (-18.6 per cent).
Annual average house prices paid by first time buyers in August 2008 were 4.5 per cent lower than a year ago. By comparison average house prices paid by former owner occupiers were 3.1 per cent lower.

Annual house prices fell in all countries of the UK except Scotland in the year to August 2008. In Scotland annual house price growth was 1.3 per cent in August. In England annual growth in house prices was -3.4 per cent in August; In Wales annual house price growth was -4.3 per cent in August; In Northern Ireland annual growth in house prices was -18.6 per cent in August.

House price annual rates of change fell in all nine of the English regions.

The highest annual house price growth was in Yorkshire and the Humber (-2.4 percent) followed by the North West (-2.6 per cent), and the North East (-2.9 per cent). Annual house price growth was lower in the South East (-3.0 per cent) and in the East and the West Midlands (-3.4 per cent each). The lowest annual house price growth was seen in London and the South West (-3.6 per cent each), and the East Midlands (-5.2 per cent).

Mix-adjusted average house prices in August 2008 were £218,281 in England, £159,734 in Wales, £164,307 in Scotland and £205,149 in Northern Ireland.

The English region with the highest average house price in August remains London at £326,908. The lowest average price was in the North East at £144,913.

Of the English regions, only the East, London, South East and the South West had average prices above the UK average.

The UK annual growth in house prices for first time buyers fell from -1.6 per cent in July to -4.5 per cent in August. There was a decrease of 5.8 per cent between July and August in the price of properties bought by first time buyers compared with a smaller fall of 0.2 per cent last year resulting in a decrease in the annual rate.

The annual house price growth rate for former owner occupiers fell from 0.1 per cent in July to -3.1 per cent in August. The prices index between July and August for properties bought by former owner occupiers fell by 2.5 per cent whereas there was a rise of 0.8 per cent at the same time last year resulting in a decrease in the annual rate.
The average price paid by first time buyers across the whole of the UK was £155,409 in August, while the average price paid by former owner occupiers was £244,641.

Tags: housing prices

Category: Property News