01 November 08

House prices down 7.3% over last 12 months

Property values fall back to level not seen since 2008...
The last 12 months have seen average property prices fall by 7.3%, taking values back to a level not seen since March 2006.

Weak consumer confidence continues to undermine demand for housing with a 35% fall in the number of applicants registering with agents over the last 6 months. The supply of properties coming to the market has also fallen back but such is the scale in the decline of demand that prices are likely to remain under downward pressure.

Some of the largest price falls in London and the South West...
The survey shows that nearly three quarters of the country saw price falls over October with the largest declines on a regional basis over the last 12 months seen in London (-8.6%) and the South West (-8.1%).

But signs that vendors becoming more realistic on pricing...
The expectation of a forthcoming recession and rising unemployment will further undermine demand for housing and continued price falls are inevitable in the months ahead. But after 5 months of falling sales volumes, the latest survey highlights a 5.4% increase in the number of sales agreed over October reflecting the fact that vendors are finally starting to become more realistic on pricing and accepting lower offers from purchasers.

Looking ahead...
Looking ahead it is the smaller properties where buyers typically require higher loan to value (LTV) mortgages to finance purchases which are likely to see some of the biggest falls. The survey shows that over the last year the average price of a flat has fallen by 8.3% compared to 6.7% for a detached house.

However with expectations now being driven by the economic outlook conditions in the housing market are set to remain weak well into 2009.

This month's survey was based upon 5528 responses from 1724 agents and surveyors across all 2300 postcodes in England and Wales.