Decline in house prices less than for any region
Mar 18 2009 by Alun Thorne, Birmingham Post
West Midlands house prices steadied early this year, so they declined in percentage by less than those in any other English region over the year to January.
The 12-month decline in the region eased back to 9.3 per cent from 10.2 per cent in December, although it remained steeper than an annual fall of 8.1 per cent recorded by the Department of Communities and Local Government for November.
The average house price in the West Midlands, though, is still lower than in other English regions, except for the North-east, the North-west, Yorkshire and Humberside and the East Midlands.
Across the UK, the DCLG reported a surprise jump of 4.9 per cent in the average price paid for detached houses between December and January.
Although prices for all other types of home continued to fall – by 2.3 per cent for terraced houses, 1.8 per cent for flats, 0.9 per cent for bungalows and 0.4 per cent for semi-detached houses – the recovery in detached homes caused house prices overall to rise by 0.2 per cent during the month.
Over the year to January, the DCLG calculates that house prices across the UK fell by 11.5 per cent to an average of £195,724.
This compares with a fall of nearly 18 per cent over the year to February reported by Halifax and Nationwide. The large difference is usually attributed to timing. The DCLG bases its numbers on completed transactions while the mortgage lenders look at the loans they agree each month, so claim to be more up to date.
Prices paid by first-time buyers continued to fall more steeply than those paid by former owner occupiers.
The DCLG reported that first-timers’ prices fell by two per cent during the month of January alone to an average of £138,089. As a result, first-time buyers were paying 15.4 per cent less this January than in January last year – compared with a 13 per cent decline over the year to December.
By contrast, prices paid by former owner occupiers rose by one per cent between December and January to an average of £229,924. Because there was an increase of 1.9 per cent in January last year, the year-on-year decline increased to ten per cent from 9.2 per cent for the 12 months to December.
Howard Archer, chief UK and European economist at Global Insight, pointed out that the DCLG’s numbers are not seasonally adjusted like those from the mortgage lenders and that house prices always tend to rise in January after falling during the Christmas period when there is little activity.
“Significantly, this January’s marginal edging up in house prices was significantly less than the 1.6 per cent rise seen in January, 2008,” he said.
“While surveys are now consistently showing that buyer inquiries are picking up significantly as people are attracted by lower house prices and the Bank of England slashing interest rates, there are currently few signs of these inquiries translating into increasing house sales.
“Indeed, we suspect that any pick-up in housing market activity will be limited for some time to come and that further significant house price drops are in the offing.”
Separate numbers from the Financial Services Authority showed the extent of the mortgage famine. New home loans – not taking repayments into account - totalled £45 billion in the fourth quarter of last year, down from a peak of £102 billion in the third quarter of 2007.
The total value of outstanding mortgages rose by just 0.25 per cent in the final months of 2008 to £1,200 billion.
The number of home-buyers falling behind with their mortgage payments started to rise sharply in the second half of last year. New cases of arrears had held steady at about 54,000 each quarter since early 2007, the FSSA said. Then the number jumped to 60,000 in the third quarter of last year, then to 68,000 in the fourth.
