A summary of the current housing market situation
House prices in England and Wales rose by 1.7% in July 2009 in comparison with June. This is the biggest monthly leap in value since July 2004, the Land Registry has confirmed.
Every region in the United Kingdom recorded a monthly rise in house value, with the average home now valued at £155,885. However, prices were still 11.7% lower in July than they were in the same month in 2008 and sales were also down. This is thought to be because sellers have realized the market is on the up and want to keep hold of their property to receive optimum payment. The annual drop in prices was sharpest in the North East of England but at its’ most shallow in Wales.
The Land Registry, who record all completed property sales in England and Wales, is widely regarded as producing one of the most authoritative house price reports, although it does lag behind data from lenders, such as the Halifax and Nationwide. It compares the price of properties sold at present with the price paid when they were sold on a previous occasion. However, repossessions and property transfers following a divorce are excluded from the sample. Also, some say that this method is misrepresentative. This is because properties, which have recently been sold, may have been last sold over 10 years ago, so this will have an adverse affect on accuracy.
The annual fall in prices eased in July compared with June, when the year-on-year drop stood at 13.8%. This was at the lowest level in July since October last year. The recovery in the housing market has been revealed in a series of surveys in recent months, including the Nationwide building society’s index which is based on mortgage data, which this week revealed prices had risen by 1.6% in August compared with July. The key word term here is in comparison to July. House price levels are still falling, but at a much reduced level.
This has proved to be bad news for tenants, who have seen rent levels rise again as former “reluctant landlords” put their homes back on the market. However, the number of dealings remains relatively low, with some experts suggesting rising prices could stall if there is a surge of properties coming back onto the market. There were an average of 35,848 sales per month between February and May this year, compared with 61,743 in the same period a year earlier. There has also been an increase in the quantity of people taking in lodgers during the recession. Cheap rent and extra revenue for the landlord is seen as the reason for this.
On a national and regional level, the biggest month-on-month rise in property values came in Wales, where prices rose by 3.1% in July compared with June. At the other end of the scale, prices rose by 0.9% during the same period in Yorkshire and the Humber.
Those buying and selling some of the most expensive homes in England and Wales were not immune to the slump in activity in the housing market at the turn of the year, the figures also reveal. The biggest drop in sales in the year to May – the latest figures available – came among properties in the £1.5m to £2m bracket. Some 38 were sold in this price range in May compared with 88 in May 2008, a fall of 57%. The number of homes sold at more than £1m in the same period fell from 453 to 242, a fall of 47%.
Meanwhile, the cheapest homes were being sold. Sales of homes, which cost less than £50,000 rose by 50% from 508 in May 2008 to 760 a year later.
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