House prices down for the last 12 months

Monday, 29 September 2008 5:53 PM

House prices fell for the last 12 consecutive months, with prices now 6.2 per cent lower than a year ago.

Data from Hometrack show house prices fell one per cent in September alone - with 65.5 per cent of postcode districts seeing house price falls.

One in eight areas saw price falls of over ten per cent in the last year.

Price falls come as the current banking turmoil re-ignites the credit crunch - leaving estate agents seeing 5.3 per cent fewer buyers.

The dearth of mortgages on the market means the average property is now on the market for 11.5 weeks.

Just 90 per cent of properties were reaching their asking price.

"Just as liquidity in the financial markets has dried up so the same is true of the UK housing market. The number of homes set to change hands in 2008 is likely to fall to a level not seen since the 1960s," said Richard Donnell, Hometrack director of research.

"Weak demand continues to put a downward pressure on house prices and looking ahead it is very hard to identify the mechanisms by which the current cycle of weak confidence, declining sales volumes and falling prices can be reversed in the near future."

However, the fall in prices has been no boost to first-time buyers, as higher mortgage costs and the need to find a higher deposit mean property ownership is as hard as ever.

The weekly cost of an average two-bed property for a first-time buyer is now 12 per cent higher than a year ago.

This makes renting 30 per cent more affordable than buying. Buying would only be cheaper than renting if average rents rose 43 per cent.

Hometrack, therefore, advises prospective first-time buyers to "steer clear of the owner occupier market until the outlook improves or until such time as the relative cost of renting versus buying narrows significantly".

Mr Donnell went on to predict 2008 ending in "property standstill" in the coming months as the number of buyer and sellers reduces further.

Tags:
• uk property news