Housing market shows resilience
The LSL/Acadametrics House Price Index shows that average house prices registered a 0.3% increase in October. This is the sixth consecutive month in which the market has seen a marginal gain in price.
Year on year house price growth slowed to 6.1%, and is expected to slow further as the small increases in 2010 fail to match the larger gains of a year ago.
The number of transactions in October rose by 2.0% in the month, but are down 7.3% compared to last October. This is the first month this year in which transactions are lower than 2009 levels.
Commenting, Richard Sexton, director of chartered surveyors e.surv, part of LSL, said: “House price growth may have been marginal over the last six months, but the housing market has shown a surprising resilience in the face of strong headwinds.
“The dearth of mortgage finance is still reining in potential purchases and lenders are actually dropping LTVs for lower-value buyers, which is hitting first-time buyers disproportionately hard. Future repayments to the government top the list of lenders’ priorities, and they aren’t likely to loosen their purse-strings any time soon.
“While house prices and transactions won’t nose dive, we don’t expect them to rocket up in the foreseeable future.
“For cash buyers – or those with a big enough deposit – the market presents an attractive opportunity. The supply of properties on sale has continued to grow, and vendors are increasingly flexible over price negotiations. We are also seeing gaps between regional markets grow wider. In the last quarter, London’s house prices have an annual growth seven times greater than those in the North. Public spending cuts are likely to hit some areas more heavily than others, and these gaps may well become gulfs over the medium-term as buyer finances are affected.”