House prices dropping in eight out of ten regions in England and Wales

Published 31st Dec 2010

House prices are falling in nearly every region in Britain, amid fears that next year could be disastrous for the property market.

Official figures from the Land Registry revealed that prices dropped in eight of the ten regions in England and Wales in November. London and the South West were the two exceptions.

The speed of the meltdown has picked up. In July, prices were falling in four regions; in August, five; in September, six, and it has now reached eight regions.

In just one month, prices slumped by 3.4 per cent in Wales, the worst-hit region, knocking off nearly £4,250 from the price of a typical home.


PRICES TO FALL IN 2011

House prices are expected to fall in the first half of 2011, according to Nationwide.

The average price of a house in December as 0.4 per cent higher than in 2009 at £162,763.

But Nationwide believes weak demand will mean this will drop over the next six months.

Nationwide chief economist Martin Gahbauer said: 'At the moment, there are probably still too few buyers chasing too many properties.

'As a result, the slow drift down in house prices is likely to persist in 2011, at least for the first half of the year.

'Whether it continues into the second half will depend on the flow of new property on to the market.'

The average home in Wales costs £120,290, compared to a ‘peak’ price of just over £141,000 in January 2008.

The figures confirm growing fears that the housing market is starting its second slump since the credit crunch struck three years ago.

Last month, house prices fell by 0.6 per cent across England and Wales. Land Registry figures do not cover Scotland. It is the third consecutive month that prices have dropped, with the majority of economists predicting that prices will continue to fall next year

It ends an extraordinary period between May 2009 and August 2010 when house prices rose every month, except one, despite the country’s economic problems.

The majority of housing experts predict that house prices will fall next year, according to a poll of 56 economists by the Financial Times. Most expect a fall of between five and ten per cent.

Chris Williamson, chief economist from the consultancy Markit, said: ‘I expect the traditional three-bed semi outside of London to see the worst of any downturn as public sector employees suffer reduced pay or job cuts.’

With an average property price in England and Wales of £164,773, the cost of a home is still far above what a worker on the country’s average salary can afford.

For a person in their twenties, who typically earns just under £21,000, the average price is nearly eight times their salary.

But the registry figures show that London remains insulated from the problems in the rest of the country.

The average price in the capital is £341,009, more than double the average in the rest of the country. Every day in September, the latest available figures, 13 homes were sold for more than £1million in London.

Experts say the prices falls in the rest of the country are being hit by a toxic combination of the mortgage drought, the imminent tax rise, the public sector jobs bloodbath and a widespread anxiety about the state of the economy.

Paul Hunt, managing director of mortgage software firm Phoebus Software, said: ‘Another dip for house prices indicates that lender confidence remains shaky. They are seriously concerned about the impact of higher taxes and lower public spending in the New Year.’

Source: ' This is Money '

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