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End-of-year rally can't mask falling house prices
Figures from Nationwide and Knight Frank show the property market is still struggling in most areas outside London.
by Michelle McGagh on Jan 03, 2013 at 11:00
UK house prices fell 1.1% in 2012 despite a 0.5% increase in the last quarter, although London property did better and is edging close to pre-recession levels, according to Nationwide building society.
The Nationwide House Price Index shows 11 out of 13 regions in the UK saw house price falls in the past 12 months.
The average house price now stands at £162,924, down 1.1% on a year ago. Unsurprisingly London was the best performing region over the year with average property prices now at £300,361 after a 0.7% rise. The capital has seen the greatest recovery in prices, which are now 1% below their 2007 peak.
Northern Ireland was the worst performing region with house prices down 8.2% in 2012. The average house price in Northern Ireland is now £104,282, similar to levels to 2004.
Robert Gardner, Nationwide chief economist, said: ‘England continued to outperform the other home nations, with prices down 0.4% in annual terms. Wales was second, with prices down 2.7% over the year, while Scotland saw prices fall by 3.3%, compared with Q4 2011.
‘Northern Ireland remained bottom of the table, with prices down 8.2% on an annual basis.’
Gardner said London and the South West were the only regions to record price growth over the year and the North/South divide has been exacerbated.
‘Within England, the North/South divide in property prices continued to widen, with the price of a typical home in the South now around £95,000 more than in the North,’ he said.
The slump in house prices is even more pronounced in the Knight Frank Prime Country House Index, which shows prime country house prices fell 1.2% in the last quarter of 2012.
The index records an annual decline in prices of 3.8% and although prices remain higher than in the market trough of 2009, country property prices have been declining for seven consecutive quarters.
The increase in stamp duty for properties worth £2 million plus, from 5% to 7%, has meant homes in the £2 million to £3 million bracket have seen a fall of 5.6% in prices in 2012 – the largest decline recorded by the index.
Rupert Sweeting, head of Knight Frank's country department, said: ‘As with any market, be it wine, art or bloodstock, the best property has sold exceptionally well in 2012. This has been at all levels and the flight to quality continues, with the near fault-free houses or estates being sold under competition.
‘Often bidders have needed other parties to bid against to give them the confidence that they were not paying too much.’
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