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Land Registry- House Prices fall 0.8 per cent

Land Registry- House Prices fall 0.8 per cent

Friday, 27 February 2009 11:57 AM

House prices fell 0.8 per cent in January, according to the Land Registry's monthly house price index (HPI) published today.

The average house price is now £156,753, down almost £28,000 on January 2008 and bringing the annual decrease to 15.1 per cent.

January was the seventeenth month in a row during which a decline in house prices was identified, opposed to the uninterrupted increase between December 2005 and August 2007.

Wales experienced the most dramatic monthly price fall, decreasing 8.8 per cent, but this was due to the 'exceptionally small' volume of sales recorded there in January. Rolling average figures for Wales indicate a monthly one per cent fall, which is a more reliable indicator of the underlying trend.

The latest figures from the Land Registry show the average price in London fell 14.1 per cent.

The Land Registry recorded sales volumes continuing to decrease, with the number of sales averaging 41,014 per month in the months August to November 2008. In the same period in 2007, the average was106,495.

Redcar and Cleveland experienced the strongest monthly growth in January with an increase of 3.8 per cent, while Caerphilly had the most significant monthly price fall during January, showing movement of -4.5 per cent.

According to property search engine Globrix, 5,467 properties were cut in price in January, by an average of £17,827.

Seema Shah, property economist at Capital Economics, said: "The recession will deepen this year, triggering a further sharp rise in unemployment. Accordingly, while the availability of mortgage credit may increase, weak buyer demand will prevent a housing market recovery from materializing."

Ms Shah added all regional housing markets remain significantly overvalued and no region would be immune to the impact of either the credit crunch or the economic recession.

"Ultimately, therefore, there is little reason to believe that house prices are approaching their floor in any part of the country. Indeed, we expect prices in all regions to fall by at least a further 15 per cent this year, with continued declines in 2010."

Lee Bramzell, chief executive of PropertyIndex.com, added: "News of further house price falls from Land Registry will result in even greater buying opportunities for buyers who have been watching the market and waiting for prices to reach affordable levels. Shrewd buyers who still have at least 20 per cent equity in their homes realise that now is a sensible time to trade up to a larger property, which they couldn't previously afford.

"Prices are not going to keep falling forever, and news of further boosts to mortgage lending from Northern Rock last week and RBS this week, as part of the latest government bailout, brings hope that an end to the mortgage drought may be in sight."

Sarah Garrod