Nationally, house prices seen to be at a similar level to the summer of 2009
Residential property prices in the UK fell by 0.6% in July but overall the trend is broadly stable with prices in the three months to the end of July unchanged.
The latest Halifax House Price Index shows an improvement on the previous month when this measure of the underlying trend reported a fall of 0.3%.
Even although there was a marginal drop in prices last month, the Halifax report says that the decline in July followed two consecutive rises as prices continue to fluctuate on a monthly basis. So far this year, there have been four monthly rises and three falls.
This means that the average UK house price in July 2012 was 0.8% higher than in December 2011, at £161,094. Nationally, house prices are at a very similar level to the summer of 2009.
Prices in the three months to July were 0.6% lower than in the same period a year earlier. This was very similar to the fall of 0.5% recorded in June as the annual rate has remained within a narrow range of between -0.1% and -0.6% over the past five months. A year ago, prices were falling at an annual rate of 2.6%.
‘The underlying trend in house prices was flat in the three months to July compared with the previous three months. House prices fell by 0.6% in July following consecutive increases in May and June as prices continue to fluctuate on a monthly basis,’ said Martin Ellis, Halifax housing economist.
‘At a national level, house prices have been very stable over the past year or so. This can largely be explained by the static nature of supply and demand conditions during this period. Looking forward, we expect little change in prices over the remainder of 2012 so long as the economic climate in the UK does not worsen substantially,’ he added.
According to Paul Hunt, managing director of Phoebus Software it is positive that house prices have remained stable in the medium term despite the darkening economic outlook.
‘Levels of supply and demand have remained somewhat stagnant due to the scarcity of bank finance and pruning of government spending. The housing industry is suffering as the double dip recession starts to bite, but mortgage lenders’ progressive attitude to moving the market forward is providing a ray of light,’ he explained.
‘In the face of trouble, their willingness to lend through the provision of innovative products is helping first time buyers overcome the larger fiscal hurdles the government has put in their way,’ he added.
A lethargic mortgage market and faltering economy have conspired to undermine house prices, according to Peter Rollings, chief executive officer of estate agent Marsh & Parsons. He pointed out, however, that the performance of central London is masking even greater falls around the country.
‘Securing an affordable mortgage without a colossal deposit is an Olympian task for the average buyer, and this is reining in competition for properties across the country preventing sales prices from climbing back to anything like their pre-crunch heights,’ he explained.
‘Recovery will be dependent on the ability of the Funding for Lending scheme to unlock the lower echelons of the housing market. At present, lenders are providing the low-risk equity-rich buyers with incredibly cheap rates. But if we are to see consistent price rises outside the boundary of the M25, cheaper finance must reach higher LTV borrowers, re-igniting buyer activity from the bottom-up. As things stand, it is only cash rich areas like prime London that are able to defy the effects of historically weak mortgage lending,’ he added.