Housing Market Continues to Stagnate

Amanda Jarvis

February 25, 2003

The hometrack national February survey of the housing market reveals house price rises of only 0.1%, the same as the previous two months, and follows a nine month steady decline in house price inflation since May’s peak of 2.0% (see graph 1 in Notes to Editors).
The slowdown has been mostly due to prices of higher value homes falling in London and the South Eastern counties.
While only two areas reported overall house price declines, Central London & City (-0.2%) and London North (-0.1%), eleven areas reported zero change in prices. These include all the other areas of London (except East London), West Midlands and Northumberland.
Elsewhere in the country, house prices mostly continue to rise. The highest price rises occurred in East Sussex (0.9%), Cumbria (0.6%) and South Yorkshire (0.5%). Only thirteen counties reported house price rises of over 0.2%. The average house price of these counties is £117,023, whereas the average house price of the thirteen lowest performing counties is £179,931. The average house price for the country as a whole edged up slightly to £135,800.
Clearly the continuing 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 healthy price rises.
While the February survey reveals a seasonal 18% jump in the number of new buyers registered, the number of new properties listed with agents rose by 19% (see Table 1 in Notes to Editors). There is presently very little excess demand to lift prices over the next few months.
Prices achieved as a percentage of asking price fell again for the eighth month in succession to 95.5%, the lowest for over two years, (see Graph 3 in Notes to Editors). It is presently taking 4.6 weeks to sell a home, and on average there are 11.5 viewings per property sold. The recent trend in these statistics points to continuing stagnation and price falls in the market.
John Wriglesworth, hometrack’s housing economist, comments: “House prices actually achieved as a percentage of asking price have been steadily falling, and viewings per property and average time to sell are increasing. All these point to little or no recovery in house prices over the coming months. Seasonal increases in the demand for properties have been swamped by supply.
“Continued uncertainty and worries over the course of the possible war with Iraq cannot be positive for the housing market. Fear encourages people to stay put rather than move house. I do not expect to see any significant increase in the market until a resolution to the present conflict is apparent.
“The recent 0.25% reduction in the Bank of England base rate is a snowflake off the iceberg of negative news emanating from the housing market at this time.
“However, we continue to predict national house price rises of 4% this year, despite expecting prices in London to fall –5.0%.”

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