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House prices 13.3% lower than a year ago

Friday, 13 March 2009 10:19 AM

House prices fell by one per cent in February, bringing the average price of a home in England and Wales to 13.3 per cent lower than this time last year.

According to the Financial Times House Price Index (FTHPI) released today, all ten regions showed prices falling on a monthly and annual basis, with the south-east witnessing the sharpest annual fall.

The FTHPI found London prices have been falling rapidly in recent months, with the south-east recording the sharpest annual fall of -13.8 per cent, and London -12 per cent.

All of the 108 districts and counties in England and Wales saw price reductions, with price falls ranging from -16.8 per cent in Ceredigion to -0.8 per cent in Poole. However, the research also indicated price falls were slowing.

Dr Peter Williams, chairman of Acadametrics, said: "The average house price is now £200,947, back to the March 2006 level, three years ago.

"More positively, the FTHPI index suggests that price falls are slowing. In this downturn November 2008 recorded the highest monthly drop at -2.2 per cent. Since then, the rate of decline has eased each month, with February 2009 at one per cent down."

"A proportion of the 2.6 million households who bought homes in the last three years (including nearly one million first-time buyers) will be feeling quite exposed. Given the scale of house price inflation in this decade, this fall is not a serious problem for most households. For most, the solution will simply be to sit it out."

The average price of a home year on year fell from £231,857 in February 2008 to £200,947 last month. Although prices continued to decline, the rate of fall was relatively slower in 2009, compared to November of last year when a fall of -2.2 per cent was witnessed.

Dr Williams added: "It is hard to predict how this market downturn will unfold. At housing market level, the slackening in the rate of the FTHPI monthly price falls, a slight strengthening in mortgage approvals and an increased number of enquiries indicate a limited possibility that the market might stabilise in late 2009.

"But, at national level, the recession continues to gather pace, fuelling arrears and possessions as well as the number of unsold homes. Whilst the government is now working to increase the supply of mortgage finance, it is quite evident many would-be purchasers remain unable to access a mortgage."

Sarah Garrod

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