Rightmove: House prices down 3.2%

Monday, 17 December 2007 12:00 AM

The seasonal slowdown in the UK property market has begun to bite, with average asking prices down 3.2 per cent during December.

According to online property portal Rightmove.co.uk, the average asking price across the country fell to £232,396 in December, down from £239,986 in November.

Annual growth now sits at just 4.8 per cent, down from 7.9 per cent last month.

However, according to the online property portal price falls, while expected at this time of year, have been exacerbated by the introduction of home information packs (Hips).

The controversial government scheme was extended to include properties with one and two bedrooms on December 14th, completing the three-stage rollout which began in August.

As a result Rightmove recorded a rush of what it considers to be 'low-end' properties entering the market; with their market share increasing from 38 to 48 per cent.

This increase in cheaper properties was responsible for around a third of the 3.2 per cent fall.

"While three months ago we forecast that the final phase of Hips would drop average prices this month, a substantial element of the fall reflects genuinely tough market conditions, and many sellers who have listed this month have priced below the market to try and sell," said Miles Shipside, commercial director at Rightmove.

Across the country the fall in prices varied dramatically.

London was hardest hit, with average prices seeing a fall of around 6.8 per cent.

This compares to falls of 3.8 per cent in the south-east and 2.9 per cent in the north.

In contrast the West Midlands was the only region to see prices rise, with the average cost of a home increasing 1.7 per cent.

"In the current downturn the problem is the property market's increased dependence on mortgage funding raised from the log-jammed wholesale money markets rather than from savings deposits," said Mr Shipside.

This means credit for future house purchases is likely to remain constricted, making it difficult to predict the future direction of the market.

"We are in a different world compared to previous housing downturns. It is a world of international banking interdependencies, and a world in which the robustness of the UK housing market has never been tested," concluded Mr Shipside.

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