Continuing slump in house prices

The latest Financial Times House Price Index shows house prices practically grinding to a halt, going from a double-digit growth rate in the summer to 0.1% in December. This represents their lowest monthly increase of the year and the slowest monthly rate since July 2005.

[ClickPress, Mon Jan 21 2008] The latest Financial Times House Price Index shows house prices practically grinding to a halt, going from a double-digit growth rate in the summer to 0.1% in December. This represents their lowest monthly increase of the year and the slowest monthly rate since July 2005.

Price increases were down from 8.9% in November to 7.9% in December. There was considerable regional variation, with the South performing better than the rest of the country, and the annual increase in London – an average 17.4% over the last three months – being almost double that of the next highest region. The North and West Midlands are the regions showing the slowest growth in house prices, with annualised inflation rates of 3.4 and 3.5% respectively.

Taken together, all regions have shown an annualised growth average of 8.8% over the past three months. But if London house prices were taken out of the picture, house price inflation would be flat for the period and show an annual rate of increase of only 5.8%.

While the data from the index confirm the downward trend in house price growth shown in other surveys, analysts warn against being excessively alarmist about the overall outlook. Notwithstanding the monthly declines, there was still a year-on-year 7.9% rise through December, significantly ahead of any measure of UK inflation.

Lawrence Smith of Decision Homebuyers points out that “The slowdown must be seen in the wider context of how strongly the housing market has been performing in recent years,” and that “the decline in house prices reflects a long expected correction to the highly inflated prices we’ve been seeing, and as such is best seen in relative terms rather than representing an absolute decrease in value.” But he affirms that 2008 will indeed be a difficult year for both buyers and sellers, with declining consumer confidence, the effects of the credit crunch continuing to filter through the market, and decidely negative press reports about the outlook all contributing to the market slowdown.

For press enquiries, please contact Phil Rendall on 020 7099 9026
Email: phil@dhbuyers.co.uk
Web: www.decisionhomebuyers.co.uk

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Decision Homebuyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.

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