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News: Weekly News Round Up - House Prices Level Out After Winter Slump

Thu, 01 Apr 10

House prices look to be leveling out following the slump in the property market earlier this year caused by the bad weather and end of the stamp duty holiday.

According to latest figures released by the Nationwide Building Society house prices rose by 0.7% in March – see Home News 31 Mar 2010.

Although this is an improvement on the 0.8% fall recorded in February the long-term picture points to price stability.

The annual increase was 9% in March, slightly down on the 9.2% annual increase recorded in February. Also, the three-monthly rise recorded in March was 1.6%, compared to 1.8% over the previous three months.

Martin Gahbauer, the Nationwide's chief economist, said: “The last two months are consistent with a relatively flat profile for house prices, and in line with the recent drops seen in buyer enquiries and house sales.”

These latest figures are broadly in line with the latest asking price figures released by Home.co.uk. The mix-adjusted average asking price for homes on the market in England and Wales rose by 0.5% in the month leading up to its March Asking Price Index report.

A mixed picture for the price of homes in London emerged this week. According to estate agency Savills, the pace of growth in the value of prime central London property is slowing down – see Home News 31 Mar 2010.

The estate agency’s latest index for London’s most valuable property saw an increase of 3% during the first three months of 2010, down on the 4.6% recorded in the last quarter of 2009.

Yolande Barnes, head of Savills residential research, said: “Some of the heat has come out of the market and values continue to be sustained largely by still relatively low stock levels.

“We’ve also yet to see any significant influx of bonus money though, which suggests buyers are still keeping their options open.”

She added that prices for some of London’s most expensive homes are unlikely to rise considerably in the coming months.

“Soundings from the market suggest that we are at or approaching a tipping point where buyers will resist pricing over the current level. The spectre of further caps on bonuses, higher taxes and a looming election, all against a gloomy economic backdrop, may be expected to stall the market and combine to make further significant rises unlikely,” she said.

The value of prime central London property is seen as a key indicator of price trends for the rest of the property market.

In contrast latest figures for the London property market as a whole from estate agency Haart show that prices have recovered well following the lull at the start of the year. Its figures show a 3 % rise in prices during March, compared to a 1.9% rise in February and a 1.4% rise in July.

Haart chief executive Paul Smith said: “It’s very encouraging that the London figures are on the up. It seems the darkest days of recession are firmly in the past, and we have high hopes for the 2010/11 financial year.”

Meanwhile, the Council of Mortgage Lenders (CML) has continued its criticism of the Chancellor’s budget this week, especially his announcement of a stamp duty holiday for first time buyers on homes worth less than £250,000

The CML is reiterating its call for a stamp duty holiday on all properties under £250,000, rather than just those in that price range bought by first-time buyers.

The organisation warns that it is too difficult to effectively define first-time buyers. While the government says first-time buyers are those that have never owned a significant stake in a property, the CML says that many first-time buyers are in reality former homeowners returning to the market.

In a statement the CML says: “It would have been simpler, although admittedly more expensive, to exempt all properties under £250,000, rather than impose an additional first-time buyer requirement that will make the tax more difficult and expensive to administer.

“Our own data on the first-time buyer market illustrates some of the practical problems in identifying genuine first-time buyers and differentiating them from ‘returners’, that is, people who are making the transition from the rented sector into owner-occupation but who have been home-owners at some stage in the past.”

The CML is also disappointed that the budget  “had little to say” regarding the shortage of mortgage funding.

 

By Joe Lepper

See also: Asking Price Index, House Prices and Trends by Town and Postcode, Mortgages, Life Insurance and Mortgage Protection Guide

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