The gloomy outlook published today (Thursday May 05) by the National Institute of Economic and Social Research predicts that prices will fall 4.5% this year and 10.5% by the end of 2015, the longest period of decline since records began in the 1960s.
‘The prospects for the housing market are very weak indeed over the next five years and that will weaken economic growth very significantly. It will be the longest period of falling house prices that we have seen,’ said NIESR economist Ray Barrell.
The news comes as the latest figures show that prices are indeed falling. The Nationwide April index shows that price fell 0.2% last month and the price of a typical home is now 1.3% lower than one year ago at £165,609.
However, Robert Gardner, Nationwide's chief economist, said that the three month on three month measure of house prices, a better measure of the underlying trend, showed a modest rise of 0.6%.
‘Since November 2010 house prices have increased in three months and fallen in three months. However, it is not unusual to see a pattern of modest monthly increases and decreases when the market is fairly static, as has been the case since last summer,’ he explained.
He does not share the view of the NIESR. ‘There is still little evidence to suggest that price declines will accelerate in the months ahead. While the UK economy only managed a modest bounce back at the start of the year, after the weather-induced contraction in late 2010, the economic recovery is expected to gather momentum,’ said Gardner.
The latest figures from the flagship Land Registry House Price Index for England and Wales also shows prices falling. They were down 1.1% in March compared with February and it puts the average property price at £160,996.
On an annual basis it says prices are down 2.3%. Only London has seen annual prices rise, up an average of 0.8%. And the only region which experienced a monthly rise was The North West with an increase of 0.7%.
The North East experienced the greatest annual price fall with a decrease of 9.3%. Wales is the region with the most significant monthly price fall with a movement of 3.3%.
The most up to date figures available show that during January 2011, the number of completed house sales in England and Wales rose by 2% to 36,425 from 35,809 in January 2010. The number of properties sold in England and Wales for over £1 million increased by 6% between January 2010 and January 2011, from 460 to 486.
