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News: Weekly News Round Up - House Prices Have Barely Moved During 2010

Fri, 06 Aug 10

The Halifax has announced that house prices increased during July, following a dip in prices during June.

However, this should not be interpreted as the start of a wave of monthly house price increases.

The rise during July was just 0.6% and the Halifax’s chief economist Martin Ellis is predicting that prices will flat line for the rest of the year.

The annual rate of house price inflation is now 4.9%, down from 6.3% the previous month, and could fall further towards 0% as the year progresses.

The lender also points out that prices between July and January have barely changed. The average house price in January was £169,000 compared to £167,425 in July – see Home News 5 Aug 2010.

Ellis added: “The increase in the number of properties for sale over the past few months, boosted by the recent abolition of home information packs, has relieved much of the pressure that was driving up prices in 2009."

Other recent indicators that prices are stabilising came from the Nationwide building society last month, which says house prices dipped by 0.5% during July. The Nationwide says the price of an average home in July was £169,347.

According to Home.co.uk’s latest Asking Price Index 74, 000 homes for sale had their asking price cut in the month of June. This is the largest number of asking price reductions in a single month since January 2009.

The increase in prices of prime central London locations over the last year has also come to an end, according to Knight Frank’s Prime Central London Index for July.
Prices for prime London property fell in July by 0.5%, which is the first monthly decline since March 2009.

Prices are still  23.4% higher than they were at their lowest point last March but are 6.1% down on prices in March 2008, which is seen by Knight Frank as the peak in the prime central London property market.
Liam Bailey, Knight Frank’s head of residential research, said: “The slowdown in the London market has been anticipated for several months. The market experienced a severe lack of houses for sale during late 2009 and early 2010, which helped to push prices higher.”

Commenting on these recent house price indices, Jonathan Moore, director of rental sector website Easyroommate.co.uk, said: “House prices have fluctuated over the past couple of months, which is a sure sign of the fragility of the market’s recovery. The surging supply of properties hitting the market following the abolition of home information packs has counterbalanced the strong demand from the thousands of buyers hoping to take advantage of low interest rates.

“But would-be first-time buyers are still being priced out of the market. On top of unaffordable house prices, many buyers cannot provide the huge deposits lenders require. Affordable, achievable mortgage finance remains key to re-igniting the recovery and unlocking the first-time buyer market.”

Latest figures released by Moneyfacts show that while the number of mortgage deals has risen, by 66% since the start of the year, the best deals are still reserved for those with large deposits – see Home News 4 Aug 2010.

Moneyfacts says there are now 2,351 deals on offer, compared to just 1,414 in January. But for more than half of these a deposit of at least 25% is needed and only 8% of deals required a deposit of 10%.

Conditions are improving, says Michelle Slade from Moneyfacts.  “Many of the best deals are now available for a 25% deposit, having previously only been available for those with a 40% deposit."

She adds that the interest rate on an average two-year fixed rate deal is now 4.5%, compared to 4.8% at the start of the year.

However, rates rocket for those with a small deposit. The average interest rate on a two-year fixed rate deal for those with a 10% deposit is 6.2%. For those with a 25% deposit the rate falls to 4.1%.

The Bank of England’s monetary policy committee delivered some welcome news to homeowners on variable rate and tracker deals this week by keeping interest rates at the historic low of 0.5%. This is the 18th month in a row interest rates have been at this level.

 

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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