Residential property prices were down 0.8% in February with the average house price in England and Wales now standing £162,215, according to the latest data from the Land Registry’s flagship House Price Index.
Year on year prices are now down 1.7% but the figures mask regional differences with two areas seeing increases in their average property values over the last 12 months.
The region with the highest annual price change is London with an increase of 3.2%. The East experienced the greatest monthly rise with a movement of 1.2%.
In contrast the North East saw a decrease of 7.1% year on year and also experienced the most significant monthly price fall with a movement downwards of 4%.
The most up to date figures available show that during December 2010, the number of completed house sales in England and Wales dropped by 30% to 54,812 from 78,438 in December 2009. The number of properties sold in England and Wales for over £1 million increased by 3% between December 2009 and December 2010, from 522 to 540.
‘Flat lending in February and the continuing economic uncertainty led the average property price to dip significantly in February. Following last week’s budget, it’s clear the government is desperate to stimulate lending, especially to bring more first time buyers to the market, but it isn’t providing the solid economic evidence required to convince lenders that backing the UK’s borrowers would be any less risky than a bet on the English cricket team,’ said Paul Hunt, managing director of Phoebus Software.
‘This is the biggest month on month drop for two years and this time there’s no room for blaming the snow. The economy is currently providing plenty of reasons for lenders to be worried and until sustained growth is visible on the economic horizon, demand will remain limp and property prices uninspiring,’ he added.
The anecdotal evidence though from estate agents suggests that the property market is more positive. The latest quarterly review from Winkworth, a leading franchisor of real estate agencies, says that activity in early 2011 has surged following the winter slowdown and there is a rise in buyer demand as registrations increase 90% between December and January.
It also says that property stock levels have been boosted by an injection of new properties in January and February with the number of new instructions doubling between December and January.
And it reports strong demand in central London where quality properties are being snapped up above the asking price before the details have even been released. Buyers from the Middle East make up 20% of foreign buyers in prime central London, up from 12%.
Even the market outside London is beginning to thaw with demand increasing and sales agreed recovering well after the winter hiatus.
It also found that more rental properties are coming onto the market as landlords grow their portfolios to take advantage of strong demand. Rents are still rising and average rent across the UK now stands at £2,126 per month. Average rents outside London are £972 per month while rents in prime central London currently are £4,016 per month.
The overall outlook for sales market in 2011 is flat, but prime areas and large family homes will continue to see price growth as demand outstrips supply, the report concludes.