October was the fifth month of consecutive house price growth, with the average property price increasing by 0.7% from September 2009, according to the latest Chesterton Humberts CEBR Poll of Polls. The average house price in England and Wales is now £171,218, a rise of £1,262 during September. The average house price is now £26,152 lower than its peak at the start of 2008.
House prices rose across all countries and regions of the United Kingdom. Prices in Scotland are now higher than they were a year ago. The annual decline in house prices continues to ease, with prices now -3.2% lower than a year ago compared to a revised contraction of 5.4% over the year to September.
All of the four main property types experienced similar increases in prices over the month. The prices of detached housing and flats bother rose by 0.7% in October, in line with the national average.
The price of the top 20% of properties by value increased by 1.7% over the month, whereas, prices of the bottom fifth rose by only 0.5%, continuing the trend of faster growth in more expensive areas.
Robert Bartlett, Chesterton Humberts CEO, comments:
“This month’s house price Poll of Polls supports our belief that the property market will experience a fractured recovery, with the London market and the top 20% of properties by value continuing to increase more rapidly than other areas and lower value properties.
“In London, where the market dropped by between 30% and 50% if currency fluctuations are taken into account, recovery has already begun, with some areas already achieving peak 2007 prices in certain prime streets. This growth has been driven by the significant numbers of foreign purchasers who continue to benefit from the weak Pound and are keen to invest into what is traditionally seen as a safe haven for foreign money. The ongoing shortage of stock has also meant that the strong demand has assisted in the price recovery as competitive buyers bid up prices.
“In other parts of the country, recovery may take longer to accomplish although the continuing stock shortage is supporting prices in many regional markets. The risk of further declines outside of London is exacerbated by asking price inflation, caused by inexperienced agents desperate for instructions giving unrealistic quotes to prospective sellers. Buyers will not pay over the odds for properties coming to market overpriced.
“The outlook is generally more positive. We expect an increase in stock which will give rise to a steadier rate of increase in house prices as the wider economy improves.”
Douglas McWilliams, Chief Executive of CEBR, comments:
“Some commentators believe that house prices will dip again in 2010 and 2011 on the back of rising unemployment and weak economic growth. We believe that this view ignores other factors that are pushing prices in the opposite direction. Mortgage conditions have improved substantially since the worst of the crisis and lending continues to edge up. With base rates on hold, mortgages will remain relatively cheap albeit with post-credit crunch loan-to-value rates and higher risk premia. Furthermore, the supply side of the market will remain tight into the medium term – the current shortage of property on the market may be causing short term supply issues, but in the medium term the current shortage of new house building will also come into play.”