Eleven months of price rises
This is according to house price trends in England and Wales from Acadametrics – the eleventh month in succession the index has increased on a monthly basis.
On an annual basis, the average price of all residential property transactions in England & Wales was 13.4% higher than a year ago – a significant recovery albeit in a market still characterised by great uncertainty. It is the fifth consecutive month in which the annual rate of change in house prices has been positive.
There were approximately 10,000 more houses sold in February than in January. However, the estimated level of 45,000 transactions in February is below the average of 51,570 homes sold per month during 2009, with the market remaining subdued. The average price of a house in London reached £376,605.
Commenting, Dr Peter Williams, chairman of Acadametrics, said: “The average price of a home rose again in March 2010 and, at £227,788, is back where it was in August 2007, some two and a half years ago. The increase of 1.1% is the eleventh month in succession in which prices have increased. However transaction numbers remain relatively low such that small pockets of demand can exert a higher influence on price than one would see in a more active market.
“This might also explain some of the differences between this index and mortgage based indices. We have noted that in all the high value areas prices have increased but transaction levels have remained fairly constant. This would either suggest that prices in these areas have actually increased, or that the higher value properties in these areas have been changing hands more frequently than is the norm – it may well be a combination of the two factors.
“The more recent Bank of England Credit Conditions survey for Q1 2010 suggests a static credit supply both looking back and forward three months, even though the expectations were that the demand for credit would increase after the contraction that followed the ending of the stamp duty holiday and the bad weather. We also know that there is considerable suppressed demand, not only from first time buyers but also movers – with the latter triggering an increase in the supply of homes for sale.
“It is quite clear that we are facing a complex interplay of factors over the next few months – uncertainty triggered by the election and the inevitable delays this might mean in policy direction, the likelihood of higher taxes and lower state spending and question marks as to interest rates and the shape of the economic recovery. These in combination with a continued lack of competition in the mortgage market and the overhanging effects of how government will wind down its support to lenders means uncertainty is the watchword.
“Given this situation it would be no surprise that the AcadHPI index may be indicating a market which is stabilising after a period of rapid recovery once the market had clearly bottomed. Moreover it does suggest that the likelihood of further dramatic falls in prices is much reduced though more modest fluctuations might be expected.”