West Midlands is worst place in UK for falling house prices
House prices fell more sharply in the West Midlands than anywhere else in the country during December and no metropolitan district suffered a steeper decline over the course of 2008 than Wolverhampton.
The Land Registry reported that West Midlands house prices fell by 3.6 per cent during the months of December to an average of £132,301, 13.6 per cent down on the year.
That compares with a 2.0 per cent drop in December a year-on-year decline of 13.5 per cent across England and Wales, where the average dropped to £158,946.
All metropolitan districts fared better than the national average, but Wolverhampton, along with Wakefield in Yorkshire, came closest with losses of 13.4 per cent. A 2.0 per cent drop in Wolverhampton during December took the average there down to £112,342.
The Land Registry’s index lags a month behind those published by mortgage lenders because it is based on completed deals, while Halifax and Nationwide compile theirs from mortgages agreed several weeks before the final transactions.
Nationwide’s index for January showed a 1.3 per cent fall this month, taking the year-on-year decline to 16.6 per cent and the average value down to £150,501.
Taking the latest three months together, house prices have fallen by 4.0 per cent from the previous three months. On this basis the pace of the decline has eased back steadily from 5.0 per cent in September.
Nevertheless, Nationwide’s senior economist Martin Gahbauer warned: “It is too early to say that this marks the start of a sustained improvement in the short-term trend”.
He noted that a traditional link between house the number of mortgages approved and that of new inquiries by buyers at estate agents has been broken. The inquiries have been recovering quite strongly in recent months, but mortgage approvals very marginally.
This could be because the inquiries are less urgent than when house prices were rising fast. People could be curious to see what is available, but hesitant to commit themselves in a recession. Mortgages are harder to find, too.
“However, the increasing level of inquiries suggests that activity levels have a reasonable chance of recovering from their recent lows once an end to the recession is in sight and/or the recent government interventions lead to an improvement in the availability of credit,” Mr Gahbauer said.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “The housing market started off 2009 with a further marked drop in prices, and it seems set for another very difficult year given that current largely unfavourable fundamentals are likely to persist for some time to come.”
However, anecdotal evidence suggests that recent steep interest rate cuts, combined with the sharp fall in house prices seen during the past year, are beginning to tempt potential buyers back into the market.
The latest figures from the British Bankers’ Association showed a 27 per cent jump in the number of mortgages approved for house purchase during December, although economists stressed that the rise was from exceptionally low levels, and at best was likely to indicate that the steep drop in approvals may have bottomed out.
Allan Monks, of JPMorgan Chase Bank, said: “Although the trend in prices remains clearly downward, the Nationwide has shown some signs of a moderation in the pace of decline.
“After the near-17 per cent drop in house prices, our forecast anticipates a smaller 9 per cent decline this year.”
