Hometrack’s latest house price survey shows that prices fell 1% over September – the twelfth consecutive fall since the start of the credit crunch.
On a year on year basis the value of an average property has dropped by 6.2% – representing an average fall of Â£1,000 per month.
Prices may be down across the country, but the falls are not uniform…
House prices were down across the whole country, but the fall in values was far from uniform. Over the last year a quarter of postcodes have seen average prices fall by less than 3% while double digit prices have been registered across 12% of the country.
London and the South East have seen the highest concentration of above average falls – but these were areas that between 2006 and 2007 saw some of the strongest price growth. Overall London prices are down by 7.1% over the last 12 months. The lowest price falls over the same period have been in the North East (4.1%) and Yorkshire and Humberside (4.7%).
Buyer confidence is being tested on many fronts…
Recent events in the world financial markets have created unprecedented levels of uncertainty. Turmoil in the banking sector, concerns over the wider economic climate and the prospect of rising unemployment mean that confidence is being tested on many fronts. For the vast majority of homeowners who do not need to move, then doing nothing, is by far the safest option.
The number of homes set to change hands in 2008 is likely to fall to a level not seen since the 1960s. And it’s this weak demand that continues to put a downward pressure on house prices.
In spite of falling price, first time buyers also struggling…
Hometrack added that while falling house prices should be good news for first time buyers, the reality is far different. Higher mortgage rates mean that the weekly cost of an average 2 bed property today is 12% higher than it was a year ago – and this before a large deposit needed to fund a purchase has been taken into account. Many would-be first time buyers are taking refuge in the rental market. And while average rents are rising on the back of increased demand, renting remains 30% more affordable than buying. As a result, cash strapped first time buyers are set to steer clear of the owner occupier market until the outlook improves or until such time as the relative cost of renting versus buying narrows significantly.