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The bad news just keeps on coming...

Jaimie Kanwar

The UK property market is still on a downward spiral, according to new DCLG figures...

Prices fell by 0.8% in November, the Department of Communities and Local Government (DCLG) said, compared with a slight rise of 0.1% in October. The annual rate of house price inflation was 9.5%, down from 11.3% the previous month. The average figure for the three months to November, seen as a more reliable indicator, fell to 10.5% from 11.1%.

The DCLG calculated that the average price of a home in the UK was now £218,330, down from £220,195 in October.  The department's figures are based on sale completions and therefore lag behind other house price indexes. The majority of property surveys are now showing a slowing market as a result of tighter credit conditions and affordability constraints.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics) commented: "Further weakness in the housing market is likely over the coming months. However, the resilience of the employment picture continues to provide a key layer of support for the market. The likelihood of further interest rates cuts during the first half of the year will also help to underpin house prices as first-time buyers are attracted back to the market”.

Regional variations

The DCLG statistics show that London recorded the biggest annual inflation rate in November at 14.1%, while the lowest was in the West Midlands at 4.3%. London also had the highest average house price of any English region at £336,095.

The average house price across England as a whole was £225,957, compared with £225,890 in Northern Ireland, £168,158 in Wales and £164,719 in Scotland. Price inflation eased further for first-time buyers, with the rate dropping from 10.9% in October to 9.4% in November.

The average price paid by first-time buyers across the whole of the UK was £165,230, down from £166,764 the previous month.

Rate cuts needed 'quickly'

Nicholas Leeming, major client director of propertyfinder.com, commented: 'The traditional Christmas slow down came early last year - price indices show varying degrees of cooling in November but they all agree that transaction levels are low. 

“First-time buyers are benefiting from increased bargaining power and are succeeding with opportunistic bids on their first home.  But high mortgage costs and falling confidence are causing many people to delay buying a home.  The Bank of England needs to cut rates quickly to keep people moving and support the economy.'