Slight rise in UK property prices in January

Residential property prices in the UK increased slightly by 0.8% in January but the general trend is downwards, according to the latest index from the Halifax published today (Friday February 04).

rices in the three months to January were 0.7% lower than in the preceding three months and this continues the slight decline on this measure since last spring. The pace at which prices are falling, however, remains markedly lower than during the second half of 2008 when quarterly declines of 5 to 6% were recorded, the Halifax adds.

On an annual basis, prices in January were 2.4% lower as measured by the average for the latest three months against the same period a year earlier and there are fewer properties coming onto the market for sale.

The latest Royal Institution of Chartered Surveyors survey, for example, reported a decline in new seller instructions for the third successive month in December. A continuation of this trend would help to reduce the imbalance between demand and supply and support house prices, the report points out.

The report also shows that there was a slight rise in housing market activity in 2010. The number of home sales in the UK increased by 4% from 846,000 in 2009 to 884,000 in 2010, according to the latest HMRC figures. Despite this modest improvement, sales remain very low historically and are just over half the annual levels of 1.6 to 1.7 million in 2006 and 2007.

‘We expect limited movement in house prices overall this year. There are, however, likely to be some monthly fluctuations with the risks on the downside. The prospects for the market in 2011 are closely aligned with the performance of the wider economy. Consumer confidence has fallen recently, partly as a result of nervousness about the economic outlook,’ said Halifax housing economist Martin Ellis.
 
‘On a positive note, there have been further signs that the recent downward trend in prices is causing homeowners to be more reluctant to put their properties on the market. This development should help to relieve downward pressures on prices as long as it is sustained. We also expect interest rates to remain very low for some time, supporting a favourable affordability position for many existing mortgage borrowers and those entering the market,’ he added.

But Mark Blackwell, managing director of property data conduit xit2, pointed out that indices are present are unreliable because the market is sp small. ‘There were less than 40,000 transactions in January and that means none of the usual indexes are as reliable as they should be. They’re just too volatile to draw meaningful conclusions from monthly statistics,’ he explained.

‘Having said that, it’s clear the housing market is bumbling along at the moment and it looks as if prices aren’t going to rise any time soon. Prices are threatened from a potential hike in the Bank Rate this spring. Not only would that punish existing owner, it would also land a savage psychological blow on potential buyers,’ he added.

Courtesy : Propertywire