House prices rise for ‘first time in 18 months’
National average weighted price £160,900
National average monthly price change +0.10%
3 month price change -0.06%
12 month price change -1.59%
Headline house prices rise by 0.1% in December
House prices have risen for the first time in 18 months according to the latest house price survey from Hometrack.
Despite the small rise in average values over December, the survey of agents shows that house prices remained unchanged in more than 84% of the country’s postcode districts. The small rise over the month was largely a function of average values rising in 9% of postcode districts, with price falls reported in just 6% of postcode districts. “A move to more realistic pricing over the past 12 months and improving buyer confidence has resulted in this small increase in average house prices” comments Richard Donnell, director of research. “Despite improving levels of market activity over the second half of 2005, average house prices have fallen by 1.6% over the year. We expect them to rise, on average, by just 1% over 2006”.
…with sales volumes holding up in the run up to Christmas
In contrast to previous years, agents reported a rather unseasonal increase in the level of sales over December. Reported sales levels were 3.7% up over the month, following a 4% increase over November. This increase in sales activity has been supported by rapidly improving buyer confidence which is also evident in the robust mortgage lending data. “After the very weak first half to the year there is something of an end of year rush with buyers keen to seal the deal before the new year” comments Donnell.
…but buyers remain highly price sensitive
Despite the increase in average prices over December buyers remain highly price and quality sensitive. The latest survey highlights that vendors are still only achieving, on average, 93.5% of the asking price as the actual sales price for a property (see chart 3). The average time to sell a property is also stuck at around 8 weeks, unchanged for much of the year. Despite signs of improving market conditions, vendors will need to continue to price their properties realistically in order to achieve a sale.
Key regional trends
This month, there were price falls reported in just one of the ten main regions, whilst four regions saw prices remained unchanged. The remaining 5 regions have seen small increases in average values in the run up to Christmas on the back of improving demand and declining levels of stock. Greater London saw the strongest growth of +0.3% over the month with much of this growth being seen in the central parts of the capital. Prices grew by a reported +1.4% in the ‘Central London and City’ area which covers the residential markets adjacent to the key employment centres of the West End, the City and Canary Wharf.
The picture across other regions is mixed. Despite average prices firming over the final part of the year, the average time on the market continues to rise across many regions with achieved prices as a % asking price below 95% across all regions.
Richard Donnell, director of research at Hometrack comments:
“After the very weak start to the year, the pick up in market activity over the second half of 2005 has clearly acted as a support to average prices, aided by declining levels of stock available for sale. However, it is clear that buyers remain highly price and quality sensitive. Whilst activity levels may have improved over the autumn of 2005 on the back of more realistic pricing it does not automatically follow that prices will start to rise. Affordability constraints remain the biggest barrier to house price growth in the short term and we expect average prices to rise by just 1% over 2006.”