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House prices to fall another 1% in 2013

The trend of falling house prices seen over the past two years is set to continue over the next 12 months, according to Hometrack.

 

by Michelle McGagh on Dec 24, 2012 at 00:01

House prices to fall another 1% in 2013

House prices have ended the year 0.3% down as two-thirds of the country saw prices drop, but the property market has still held up better than last year.

Hometrack’s December survey shows 20% of postcodes registered price increases in 2012, but falls were recorded across 66% of the country. This means the average house price has ended the year down 0.3% over the 12 months to December, but is still far less of a decline than the 2.3% fall in 2011.

Unfortunately, the trend for falling house prices seen over the past two years is set to continue, with Hometrack predicting a further 1% drop in 2013.

Richard Donnell, director of research at Hometrack, said: ‘The underlying trend of prices falling in more areas than rising has been well established for the last 26 months and we expect this to continue over the year ahead.

‘We forecast national house prices to drift lower over 2013 with prices falling by 1%.’

December’s property figures attest to this gloomy outlook, with prices falling 0.1% over the month, the sixth consecutive month in a row prices have decreased.

This can partly be blamed on seasonal slowdown, which saw buyer registrations fall 4.8% and property listings drop 3.1%. It also meant it took on average 9.7 weeks to sell a house and the percentage of asking price gained this year was 93.2%.

Despite a slight drop in London house prices last month, prices grew across 70% of postcodes in the capital in 2012, up form 42% in 2011. A London property is on the market for an average of six weeks.

Hometrack said the London property market will have ‘an important bearing on overall house price growth in 2013’ and it expects prices to increase 2% in the capital over the coming year.

Donnell said: ‘The impetus for growth in central London looks set to slow in the near term as concerns about tax changes impact the upper end of the market. Affordability constraints will keep growth in domestic markets in check.’

The North-South property divide looks set to continue as Donnell pointed out that pricing in the South will continue to be supported by lack of supply and low turnover of property.

He said that the government initiatives to increase lending have now been priced into the market and affordability will continue to be an issue.

‘The lack of any clear value for money in the housing market means that affordability constraints and a general unwillingness by households to take on debt will continue to  act as a drag on the housing market in 2013 – at least until such time as the economic outlook sees a clear improvement.’

7 comments so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Dec 24, 2012 at 01:44

total crap house prices WILL collapse next year guaranteed.

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Forestbhoy via mobile

Dec 24, 2012 at 08:09

Would be better if house prices collapsed this year, rather than take the slow death of waiting 10 years for houses to become affordable for first time buyers. Oh and buy the way, London prices and ability to sell does not interest me and many others that live outside the m25.

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Anthony O' Grady

Dec 24, 2012 at 09:11

Agreed. The property market is an overblown ponzi scheme, which is being propped up by artificially low mortgage rates brought about by Govt manipulation. What we really need is a healthy correction free of Govt interference. Whateverr happened to free market capitalism?

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Dividend Income investor.com

Dec 30, 2012 at 13:14

Government stimulus will help several assets, including property, at least, in the short term. Generally, however, home prices and personal incomes tend to rise more or less together. When people earn more money, they can afford to buy more expensive homes and the demand for housing rises.

Home prices have risen substantially more than inflation adjusted incomes, the last ten years. Sine the initial housing bubble pop in 2008/09, the housing market bubble is still deflating and I expect this to continue to do so until several other bubbles pop.

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rich banker

Dec 30, 2012 at 23:13

Average house prices are very misleading -WHY?

Because there are loads of rubbish flats out there, especially in city centres oop north, but also in parts of London.

So if you want quality NOW is a good time to buy to get the property you want.

Beg or borrow the deposit, sadly many younger buyers were conned into Uni and debt and are pretty mad about it when after the gap year, cc debts, boozing mucho, and girls and sex, babies even, they rue the day they did not save a little bit or splash out so much on the cc. Tough suckers you were conned. But waiting for nice properties in good locations will mean you wait a long long time. And are probably paying loads of money to rent whilst you wait.

I can wait for prices to rise .. I even got discounts at the height of the boom and hey for loads of my finance I pay 0.88% - Yup under 1%. So pester mum, dad, granny or uncle and get that deposit together, or just keep on paying my rents that go up and up. But hey you get quality nowadays.

Remember when prices rise on property, which they will sooner or later, like when the Yanks sort out their debt cliff and the continentals sort out the € then watch it happen.

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forestbhoy via mobile

Jan 01, 2013 at 20:28

The real prices,of what houses really are going for,has been hid and manipulated to keep asking prices falsely high. The sooner this comes out, the better for the housing industry and the economy.

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rich banker

Jan 02, 2013 at 11:48

Says forestbhoy - High House Price kept high -

No quite the reverse.

By banks using Q.E. money to rebuild balance sheets not help economy, limit mortgages to famine levels, ask for huge deposits of 40% or more, charge silly rates given BR is 0.5% and so on..........

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