Residential property prices in the UK fell 0.1% in October and have now increased 5.5% over the year, according to the latest hous price index from the department of Communities and Local Government.
The average mix-adjusted UK house price was £209,466, not seasonally adjusted, and average house prices were 0.2% lower over the quarter to October, compared to a quarterly increase of 0.5% in July, seasonally adjusted.
The data, based on mortgage completions during the month of October 2010, also shows a widely variable picture on a regional basis. Average prices increased during the year in Wales by 9.1% and in England by 5.9% but were lower in Northern Ireland, down 8.9% and down 0.4% in Scotland.
Prices paid by first time buyers were 3.4% higher on average than a year earlier whilst prices paid by former owner-occupiers increased by 6.3%. The report also shows that prices paid for new properties were 4.4% higher on average than a year earlier whilst prices for pre-owned dwellings increased by 5.6%.
Meanwhile there are no signs that more mortgages are available. The latest figures from the Financial Services Authority (FSA) in its Mortgage Lending Data for the United Kingdom report for the third quarter of the year shows that lending for house purchases accounted for 64% of new advances, the highest percentage in the series and 61% of new commitments.
The total value of outstanding loans though is £1,220 billion, an increase of less than 1% on last quarter. New advances in the quarter totalled £41 billion, 12% higher than in the second quarter but much the same as the amount advanced in the third quarter of 2009.
New commitments totalled £38 billion, 6% down on the previous quarter but again in line with the third quarter of 2009.
There is concern that lack of lending is having a major impact on the UK’s real estate market. According to Charlie Ellingworth, director of Property Vision, the buying agent and subsidiary of HSBC Private Bank the days of automatically selling your house for more than you bought it for are over.
‘November produced some really quite shocking statistics on the mortgage front. Net mortgage lending for September was £112 million. The figure in September 2007 was £10 billion. Even allowing for irrational exuberance and lamentable lending standards in 2007, that is a fall that brings to mind cars and cliffs,’ he said.
‘Gone are the days of 100% loan to value mortgages. Old-fashioned concepts such as deposits are now in vogue again and valuers, even in our market, are subtracting another 10% as an additional cushion, all of which brings to mind stable doors and horses,’ he added.
He also points out that according to the Home Builders’ Federation, the average age of a Briton buying his or her own home without assistance is now 37.