House prices continuing to rise but pace of monthly increases falling back

November marked the sixth month of consecutive house price growth, with the average property price increasing by 0.5% from October 2009, according to the latest Chesterton Humberts CEBR Poll of Polls, down slightly from the 0.7% rise of last month.

The average house price in England and Wales is now £172,639, bringing the annual decline to just -0.4%.  It now seems certain that the year-on-year change in house prices across England and Wales will turn positive next month.

Six of the eight major house price indices showed monthly increases for the most recent month of data.  The other two indices measure asking prices, suggesting falling prices earlier in the sales process, with agents becoming more realistic with valuations.

House prices in London also rose by 0.5% over the month to November, however the annual change in house prices turned positive, increasing to 1.8%.  The average property price in the capital is now £5,513 higher than in November 2008, the largest increase in value over the year of any country or region in the UK.

The trend of top value properties rising more rapidly in value than low value properties continues, with the price of the top 20% of properties by value increasing by 1.3% between October and November.  Property prices of the bottom fifth rose by only 0.2% over the same period.

Property prices increased in the five most expensive local authorities, all in London, while prices decreased in the five least expensive local authorities.  Camden, due to high value but low transaction numbers, has posted a 22.3% gain which should be smoothed over coming months.

Robert Bartlett, Chesterton Humberts CEO, comments:

“It remains to be seen whether the house price increase momentum in London will continue following the announcement of the bank payroll tax in the Pre-Budget report.  Lower bonuses could dampen demand for top-end housing in the capital.

“In October we highlighted that the agency-induced asking price increase was not sustainable as it had been created by inexperienced agents desperate for instructions giving unrealistic quotes to prospective sellers.  It now looks as though the frenzy is abating and more realism appearing in valuations which should lead to a more stable market.

“The forthcoming election is likely to slow the market as both buyers and sellers move to the sidelines to await developments but overall, 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:

“While the pace of the most recent monthly house price increases has fallen back of late, the rate of change in house prices was always expected to ease after the bounce experienced over the summer and autumn months. Even though the pace of growth is slowing, average house prices have still increased by an impressive five per cent since the bottom of the market in April, surpassing virtually everyone’s expectations at the start of 2009.

“We still expect house prices to continue to grow in the New Year – albeit at a slower rate – as lending conditions continue to ease, base rates remain at historic lows and growth in demand continues to outpace supply. These supply shortages will persist into the medium term due to the minimal level of new house-building seen over the past eighteen months.

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