Residential property prices in the UK at a virtual standstill and falling in London

Prices rose just 0.1% compared to February, the smallest margin ever recorded at this time of the year, when prices have never fallen month on month, according to property website Rightmove. Prices in London fell 2.5%, its report also shows.
 
‘The small increase in March shows how much more unpredictable the market has become. In some areas more restrained pricing is required as a direct consequence of buyers having more choice,’ said Miles Shipside, commercial director of Rightmove.
 
The group attributed the low figure to a surge in the number of people putting their property up for sale during the four weeks to March 6. The number of properties on the market jumped by 17.5% compared with the previous month and 34% compared with the same period of 2009 to stand at its highest level for 18 months.
 
Rightmove said the steep increase in competition among sellers had given people less opportunity to increase their asking prices but it is still predicting some further rises in the first half of this year when buyers have picked over the newly marketed stock.
 
The gain across the UK this month compares to the 1.3% average increase for March from 2002 to 2009, Rightmove said. Asking price gains slowed from last month’s 3.2% advance, the biggest since April 2007. The report shows asking prices rose 6.1% from a year earlier.
 
The North led gains among the seven of 10 regions tracked by Rightmove, with a 6.6% increase on the month. London and East Anglia fell the most, dropping 2.5% each. Kingston-upon-Thames’s 5.9% drop led declines in the capital, followed by a 5.7% decrease in Westminster.
 
It remains unclear whether February’s data was a blip caused by the severe weather conditions in the UK or a more long term trend, but commentators are warning that the outlook is far from bright.
 
The Ernst & Young ITEM Club has predicted house prices will slide 1.4% in the year to the fourth quarter of 2010, before slowly recovering in 2011, while The National Institute for Economic and Social Research has factored in a fall of just under 1% in prices this year and by almost 3.5% in 2011. The compares to a 16pc fall in 2008 and a 6pc rise in prices last year.
 
‘We still think house price are overvalued relative to fundamentals. At some point or other house prices have got to adjust,’ said Ray Barrell, senior research fellow at NIESR.
 
Many commentators, including Halifax, are predicting a combination of price rises and falls over the coming months. Halifax is forecasting zero growth in prices over the year as a whole.