September pick-up in transactions
This is according to LSL’s latest Acadametrics index which shows that average house prices registered a 0.2% increase in September. Over the last six months, house prices have registered a modest 1.0% growth.
Year on year house price growth slowed to 7.0%, and is expected to slow further as increases in 2010 fail to match those of a year ago, according to the survey.
David Brown, commercial director of LSL Property Services commented: “Historically, transactions slow in September but there has been a welcomed increase in activity this year compared to last. The London market has been particularly active, with sustained investment from foreign investors and cash-rich buyers fuelling an increase in transactions.
“Despite the sluggish growth in house prices, there have been some small rises over the last five months but the next few months could see changes.
“People know that imminent public spending cuts will hit their household finances. Added to that is the problem of mortgage finance, which remains the main hurdle for first-time buyers. And as lenders turn their attention to repaying the £300bn they owe the government in the Special Liquidity Scheme, the market won’t loosen up any time soon.
“On top of this, the FSA’s proposals in the Mortgage Market Review may well add further constraints to the FTB market. While we won’t see a double-dip in the housing market, we don’t expect market activity or house prices to continue their upwards march in the short-term.”
Dr Peter Williams, housing market specialist and chairman of Acadametrics, commented: “The average price of a home in England & Wales is now £223,965. At this level, it is down £7,863, or 3.5%, from its peak in February 2008 of £231,828.
“Over the last six months, we have witnessed relatively small changes in house prices, such that the average price has changed by a modest 1.0%, although as we show below this single average figure masks some dramatic movements in prices at a more local level.
“Our annual rate of growth at 7.0% reflects past price changes rather than activity in more recent months and, as earlier months drop out from the annual calculations, we will see the annual rate of growth continue to fall over the remainder of the year. We anticipate that some, but not all, of the regions in England and Wales will be showing falling prices on an annual basis by December 2010.
“Thus yet again, we are reporting on a national housing market which in terms of average prices is flat with little evidence of the normal autumnal bounce with buyers and sellers moving in numbers to transact well before the Christmas season.
“This is a reflection of a range of factors including lack of confidence, such as concerns re Budget cuts, tax rises and job losses, a reluctance by sellers to accept lower prices, the shortage of mortgages and continued affordability pressures for those trying to enter the market.
“It is little surprise that there is limited life in the market and that where there is, it is the better off areas that are showing more movement in both prices and transactions.
“Looking ahead to the end of the year and into 2011, there is little to suggest that this picture will change very much in the short to medium term. Loans to first time buyers remain low by historic standards, the Homebuy Direct scheme with housebuilders has just ended, the Support for Mortgage Interest rate has been almost halved and we know that the FSA’s proposals in the Mortgage Market Review will, if implemented, impact heavily upon the FTB sector.
“Taken together with the other pressures listed earlier, there is little to suggest an upturn in activity or prices while all of this works through.”