House prices fell in March with homes in some areas now worth less than a year ago, official figures show
05-02-2015
- Only London and the South East posted monthly gains
- Estate agents warn of falling demand and first-time buyer sales
- Sales down 18 per cent on a year ago
By Ed Monk for www.Thisismoney.co.uk
House prices fell in March meaning average values in some areas of the country are now lower than a year ago, according to official Land Registry data.
The Land Registry reported a 0.8 per cent fall in the average UK house price between February and March to £178,007. It was the largest month-on-month fall for four years.
Average prices in the East Midlands, Yorkshire and The Humber, the West Midlands, the South West, The North West, the East, Wales and the North East all fell over the month.
Annual price change by county: Where are prices lower than a year ago?
Only London, at 0.2 per cent, and the South East, at 0.8 per cent, posted monthly gains.
It means the UK average price now stands 5.3 per cent higher than a year ago - the lowest rise in 13 months.
However, average prices across the North East of England are now 2.9 per cent down on the same point last year after a sharp 4 per cent fall between February and March. Annual price rises have fallen to 2.2 per cent in the North West and 2.7 per cent in Wales.
It comes amid an overall fall in housing market activity. The Land Registry said completed house sales in England and Wales during January 2015, the most up-to-date figures available, fell by 18 per cent to 53,168 from 65,175 in January 2014.
The number of properties sold in England and Wales for over £1 million in this time decreased by 19 per cent to 851 from 1,049.
The Land Reigstry data is based on completed sales figures and generally lags other house price measures by a month. Nationwide yesterday reported a 1 per cent rise in its index for April.
Howard Archer, chief UK and European economist for IHS Global Insight, said: 'Despite the 0.8 per cent drop in house prices in March reported by the Land Registry, we maintain the view that house prices are likely to rise by around 5 per cent in 2015.
'There are signs that housing market activity is now slowly turning around after weakening during much of 2014 and we suspect it will gradually improve over the coming months. It is also likely that limited supply of houses will provide support to house prices over the coming months.'
Down turn: Annual prices rises are headed lower
Experts have suggested that the slowdown in sales is supporting prices, as there is a shortage of houses coming onto the market. Estate agents have reported sellers having problems securing a mortgage for their next move due to tougher mortgage checks introduced last year, effectively trapping them in their current property.
Separate research today from the National Association of Estate Agents claimed demand is at the lowest it’s been since March last year, with just 343 buyers registered per branch, compared to 366 in February, and 406 in September 2014, when demand was at its highest.
While demand is down, supply is up 12 per cent, from 43 to 48 houses per NAEA member branch as houses stay on the market for longer.
Nearly two thirds, 63 per cent, of NAEA member agents have seen the housing market cooling since Mortgage Market review reforms were introduced a year ago.
The MMR rules now require lenders to conduct tougher checks on mortgage applicants including whether they could afford their repayments if, at any stage in the first five years of the loan, the Bank of England base rate were to rise by 3 percentage points. This would take the typical mortgage rate to near 7 per cent.
The NAEA said that less than a quarter, 22 per cent, of total sales were made to first-time buyers in March – down eight percentage points from February.
Nervousness about the election was contributing to falling demand the NAEA said, although it expected prices to jump again after the polls close.
Mark Hayward, managing director of the NAEA, said: 'We would always expect to see an event as monumental as a General Election having an impact on the property market. But what makes this election so interesting is that no one knows what the result will be.
'And with housing policies featuring so prominently in all three main parties’ manifestos, buyers in particular are holding off to see what will happen. The outcome of the election will impact first, second, third and last time buyers.'
He added: 'Although our agents have seen the market cooling off ahead of the General Election, it will inevitably bounce back again at a rapid rate after May 7th, so it is more important than ever that the party elected focuses on increasing the supply of homes.'