Prices down at bottom end of UK property market

Friday, 4 April 2008 12:00 AM

Property prices in the most affordable 20 per cent of the UK's property market fell during March, while those at the top of the market increased.

According to research form Chesterton estate agents the value of properties in the bottom 20 per cent of the UK market fell by 0.1 per cent, to £418 billion over the month.

In contrast the same research showed the value of the top 20 per cent increased by a modest 0.3 per cent - rising to £1,117 billion.

The research, compiled by the Centre for Economics and Business Research (CEBR), also found London has been drawn into the wider house price slump.

While the capital has proved robust to deteriorating conditions during recent months, the Chesterton research finds fell in 14 of the 32 local authorities in London.

However, on an annual basis, London house prices performed better than anywhere else in the country, growing by 11.3 per cent.

The slowest annual price growth occurred in East Midlands, West Midlands and Wales, where prices grew by only 2.2 per cent.

"House prices are probably not doing quite as badly as the headlines from some of the mortgage providers imply," said CEBR chief executive, Douglas McWilliams.

"With mortgage advances down 40 per cent on a year ago, their mix has changed and their year-on-year comparisons are affected.

Annual growth for the UK now stands at 5.6 per cent according to Chesterton.

The credit crunch is behind the slowdown argues the estate agent.

"As the impact of the credit crunch feeds through to the property market, we are noticing buyers are becoming more cautious," explained Chesterton's sales and lettings director for north London, Richard Davies.

"While price reductions are more common in the bottom end of the market, the top end is certainly not immune. There is a trend of buyers at the upper end of the market who require no or very little finance and therefore are not impacted by the credit crunch."

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