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Weakening house prices slow to a year end low

UK house prices rose by just 0.1% in December, the lowest rise in more than a year, according to figures released by Hometrack today.

The property web site suggested the slowdown has been driven by falling prices in London and the south east of England, but said the price boom was continuing elsewhere in the country.

Hometrack's figures have suggested a fall in the rate of house price growth for the past seven months, after peaking with a rise of 2% in May.

Areas with the highest price falls are Central London & City (-0.3%), Berkshire (-0.1%), South West London (-0.1%) and West London (-0.1%).

Elsewhere in the country, prices mostly continue to rise. The highest price rises occurred in Devon (0.6%), County Durham (0.5%) and North and East Yorkshire (0.4%). The average price of the twenty counties with the highest price rises is £128,160, whereas the average price of the twenty lowest performing counties is £284,125.

Clearly the house price slowdown is stemming from the high value top-end of the housing market while the more affordable homes, mostly in the outer counties, are still showing fairly healthy price rises.

Prices achieved as a percentage of asking price fell again for the sixth month in succession to 95.9%. The recent peak was 97.7% back in June this year. It is presently taking 4.4 weeks to sell a home, and on average there are 10 viewings per property sold.

John Wriglesworth, Hometrack's housing economist, comments:

“There is no question that the housing market has been slowing down over the course of the last six months, and this trend is likely to continue into next year.”

“At the top end of the market, London and the South East, price falls have already started, due mainly to fear of unemployment spurred by the recent spate of City-based job losses. However, the rest of the country is still booming. With the lowest interest rates for fifty years and high employment levels nationally, there is plenty of scope for future price rises.”

“We are forecasting 4% for the UK as a whole for 2003, but this accommodates a –5% fall for Greater London. There will be a significant North-South divide next year, with the North buoyant and active and the South East slowing and stagnating.”