UK Home Prices Remain Suppressed as Eurozone Crisis Lingers

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According to London-based Chesterton Humberts/CEBR DECMBER 2011 House Price Poll of Polls report, UK house prices remain suppressed as the economy flirts with a double-dip recession.

In the midst of a housing double-dip that has lasted for ten straight months, confidence has yet to fully return in the market. House prices have fallen year-on-year by 0.6% in January which is a reflection of price declines across all regions outside London.

A total of 52,939 mortgage approvals were transacted in December 2011, which is 24.5% higher than the same month a year earlier. However, mortgage approvals are still some 50% below levels reached during 2007.

Key highlights of House Price Poll of Polls report include;

• House prices in the UK are -0.6% lower in January 2012 compared to a year earlier.
• The average house price is £175,020, which is around 1.5% lower than the average house price throughout 2010 and broadly flat compared to 2011.
• Business confidence remains weak in January, which point to increased chances of a double-dip recession. This is likely to rein in housing transaction activity.

Robert Bartlett, Chesterton Humberts' CEO tells World Property Channel, "Although the market remains sluggish, the four traditional drivers of property sales ensure that transactions continue to take place.  Thankfully, due to continuing low interest rates, debt is less of a sales driver than it has been in previous recessions but death and divorce are unfortunately always with us.  Downsizing can be quite a relief to homeowners longing for freedom from having to maintain a property too large for their current needs.

"The fact that house prices are lower in many parts of the country compared to last year is particularly poignant as December 2010 was fraught with disrupted economic activity and poor weather conditions.  This year, by contrast, December 2011 was comparatively mild in terms of weather, although uncertainty from the Eurozone crisis had reached its peak during this time."

Bartlett  concludes, "London remains ahead with house prices on an annual basis 3.9% higher in January 2012 compared to a year earlier. The South East is the only other region where prices are higher compared to last year - a meager 0.2% higher compared to last year."

Lower registered house prices compared to last year are particularly poignant as December 2010 was fraught with disrupted economic activity and poor weather conditions. In contrast, December 2011 was comparatively mild in terms of weather, although uncertainty from a Eurozone crisis had reached its peak during this time.

Douglas McWilliams, Chief Executive of CEBR also commented, "The latest business confidence numbers for Q1 2012 show sentiment remaining firmly in negative territory. Indeed, we could already be in the midst of a recession, which implies further falls for house prices in the months ahead. However, we may see additional quantitative easing from the Bank of England as early as spring, which will prevent mortgage lending in the economy from flat-lining completely."

The methodology behind the Poll of Polls is unique in that it uses all of the major national house price and asking price indicators and weights their results according to the historical accuracy of the various indices. It also captures all residential properties, rather than only those which have been sold or are for sale, by incorporating the stock of residential properties in England and Wales.