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UK property prices set to finish the year where they started

The data from the Halifax shows that the underlying market trend was negative for the second successive month following three consecutive increases. There has been an even split of monthly price rises and falls this year with five of each and one month of no change.
The average UK house price is now £161,731 on a seasonally adjusted basis. Annually they are down 1% which is the smallest annual fall since November 2010 when it was 0.7%.

‘Overall, house prices have remained remarkably stable in 2011 despite the difficult and deteriorating economic climate and the substantial pressure on households' finances.  The UK average price now is only marginally lower than at the end of 2010,’ said Martin Ellis, housing economist at the Halifax.

‘In addition, activity has recently shown a few signs of strengthening a little. We expect the market to remain broadly unchanged in terms of both prices and sales over the coming few months as demand and supply conditions alter little,’ he added.

The outlook for 2012 is choppy according to property professionals. ‘The annual fall in house prices reflects a tough year for the UK economy and shows how tightly constrained mortgage lending has been over the last 12 months. As the eurozone crisis unfolds, it’s unlikely this picture will change soon as the UK faces some potentially choppy economic waters in the next 12 months,’ said David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains.

‘But buyers with large deposits are in the box seat. As prices fall and mortgage rates are low property is becoming increasingly affordable and there are plenty of very good properties on the market for those willing and able to enter the market. But people without substantial savings to put towards a deposit will find making a property purchase a distant prospect until mortgage lenders are convinced a fair economic wind is blowing again in the UK or the govt takes decisive action to boost the housing market,’ he explained.

He believes that making the recently announced mortgage guarantee scheme more widely available than the new homes market and re-introducing the stamp duty exemption on all property purchases below £250,000 would be welcome news for hard pressed buyers. ‘These measures would bring more investors back into the market, easing the under supply of rental property with the knock on effect of slowing the relentless upward march of rents,’ he added.

The Halifax national figures don’t show the full picture, according to Mark Montgomery, commercial director of 1st PropertyLawyers. ‘While London and the South East have remained more buoyant and prices have even grown according to some indices, other regions such as the North East have seen a large drop in house prices over the past year,’ he said.

‘We often talk about the UK property market, but it would really be more accurate to look at it as  multiple regional and local markets, each with individual trends and price changes. It is therefore very important that people look at prices in their local area  and for comparable properties to gauge the likely value of their home to avoid being disappointed when they come to sell,’ he added.