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'Soft landing' may have already happened

House prices have entered a new era of stability and a 'soft landing' may have already have happened, according to an asking price survey.  

According to the latest Home.co.uk asking price index, prices have stabilised sufficiently since the dramatic rises of 2004 and subsequent downward adjustment, to suggest a 'soft landing' was found in April this year.

The more speculative pricing practices, characteristic of surging markets, have been significantly reduced over the last two years in most regions, said the report, with the 'froth' dieing away way to reveal asking prices that are more consistent with current affordability constraints dictated by the cost of borrowing.

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Asking prices for homes currently on the market in England and Wales moved up again this month, by just 0.5%.

Despite a rise in interest rates, confidence amongst sellers of residential property has firmed up over recent months. The sustained market correction in asking prices, noted in previous reports, has now slowed further to give a 12 month change of just -0.6%.

The more recent national average trend, over the last six months, indicates a consolidating market. This new phase of asking price stability has been brought about through a combination of marginal price increases in market entrants and reduced discounting activity with respect to prices of houses already on the market.

Regional Housing Markets

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Regional average asking prices for October 06, showing gains and losses over the last year.
Scotland	£150,469	+11.5%
Wales	£192,306	+3.6%
South West	£259,689	+2.5%
West Midlands	£199,309	+0.7%
Greater London	£308,503	+0.6%
Yorkshire and Humber	£169,378	-0.1%
East Midlands	£185,611	-1.9%
South East	£270,796	-2.0%
North West	£185,724	-2.6%
East Anglia	£253,140	-2.7%
North	£165,380	-4.8%
Laspeyres indices based on weighted arithmetic mean of regional house prices

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The preceding table clearly illustrates the continued regional disparity in average house price trends between the various English regions, Wales and Scotland over the last year. The strongest and weakest areas, Scotland and the North respectively, show a striking price change differential of 16.3%, which serves to underline the relative diversity in market sentiment around the UK.

Despite a having the highest price to earnings ratio (12.4), asking prices in the South West continue to rise (1.0% since the September report and 2.5% since November 05). Scotland, Wales and the South West are the only regions to have shown notable asking price rises over the last 12 months.

After a period of extraordinary growth lasting several years, the average asking price in Scotland has been essentially stagnant for the last six months, showing little deviation from the £150,000 mark. This trend is consistent with a market wherein the affordability constraints have been reached.

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