House Prices A Guide To UK Property Prices

Date Published:

06/06/2008

Just because house prices are falling in some areas, it doesn't mean they are elsewhere. So, just what is happening to house prices around the country? Find out here...

By Gordon Miller

Ever since the credit crunch became common currency in late Autumn 2007, the press has talked about falling house prices. Firstly, they speculated when they would begin to fall, next by how much and lately when they might stop falling.

The articles usually discuss the UK's property market in a broad-brush stroke. 'UK house prices to fall by 10 per cent', shout the headlines. But Britain is a pretty disparate place and what makes sense in one region - or county - rarely applies in another.

For example, Halifax reports that nationwide house prices fell by 2.5 per cent in March. The biggest fall was in the West Midlands (-5.0 per cent) and Wales (-4.7 per cent). There were also price declines in the South West (-2.6 per cent), Northern Ireland (-1.5 per cent), Yorkshire & the Humber (-0.5 per cent) and the North West (-0.5 per cent).

Martin Ellis, chief economist, said: 'Prices in 2008 Quarter 1 were 1.0 per cent lower than in 2007 Quarter 4. Overall, we expect there to be a modest fall in UK house prices this year. Any declines, however, should be viewed in the context of the significant house prices rises over recent years. The average UK house prices has risen by 171 per cent in the last decade.'

Data is notoriously inconsistent, particularly in the property sector where companies use different indices and methods to evaluate the market. However, Chesterton, an estate agency, concurs with Halifax in reporting house prices falls in Northern Ireland and Wales.

Chesterton's latest House Price Poll of Polls (PoP), compiled by the Centre for Economics and Business Research (CEBR), highlighted that on an annual basis, house prices fell in Northern Ireland, the East Midlands and Wales. The largest fall was in Northern Ireland, where prices fell by 4.6 per cent.

Robert Bartlett, CEO of Chesterton, said: 'The credit crunch continues to blight the housing market, which is causing great difficulty for both buyers and sellers. Recent injections of liquidity into the banking system has yet to find its way to those seeking mortgages .

'Higher priced mortgages products and greater caution from the banks is now having a negative effect on house prices. This scenario is likely to remain whilst banks repair their balance sheets and until interest rates drop significantly.'

The picture in the traditionally buoyant Prime Central London market is slow but not wholly subdued. Estate agent Knight Frank reports growth in prime central London residential prices slowed further during March, with house prices rising only 0.1 per cent over the month.

Liam Bailey, Head of Residential Research at Knight Frank said: ‘The pattern of slower monthly growth rates seen over the last five months continued into March with our prime central London index recording near even growth of just 0.1 per cent, the same level as November 2007 and the lowest level since January 2005.

‘The slowdown was also reflected in our quarterly figure which show prices of properties in this sector, the traditional flagship for the UK property market, increasing by only 1.8 per cent.

'As to the future we don’t foresee a collapse in the prime central London market, with the proviso that this assessment is based on more normalised conditions in the UK mortgages market over the next quarter.'

Within Greater London, agents Kinleigh Folkard & Hayward report a varied picture from its local agents. In Brockley, Kent the branch reports a constant level of instructions for two months, with the highest demand for properties between £300,000 and £500,000.

In Highgate, its local agent reported a quieter market, but activity is still happening particularly in the under £500,000 market which represents the busiest share of the market. In nearby Muswell Hill, the agent reports sensible pricing is leading to chains being agreed and that there are serious buyers in the market.

In Islington, north London, Ian Fraser of agents Winkworth< said: 'Asking prices in this area have pretty much stayed the same in the last 12 months; it's the actual selling prices that are down 10-12 per cent. But, following the 'jitters' in January and February, confidence is returning, particularly amongst first-time buyers.’

Remaining in the South East, Steve Deo, an agent for Winkworth in Brighton, said: 'It has become a real buyer's market and vendors are having to be much more realistic about what prices they put property on the market at. Property in some cases is being sold at up to 5 to10 per cent below the asking price.’

Alisdair Gibson, of Winkworth Tunbridge Wells, said: 'Buyers are negotiating prices, with some quite cheeky offers coming in; as much as 10 to 15 per cent below the asking prices. Sellers are holding out for asking prices that were set two months ago, but it is now quite rare for them to get it if they were historically priced.

'In terms of the percentage difference between asking price and sale price, flats are selling for nearer the asking price than detached country houses.'