Government Figures Confirm House Price Slowdown

The latest house price data shows the merest increase in prices. The report by the Department for Communities showed that an average home in the UK rose in price by just £220 in October, to £220,195. This represents an increase of just 0.1%.

Although these figures are slightly out of date compared with others from Nationwide and Halifax, they certainly support figures which show a slowdown in the market. Halifax’s most recent figures showed a fall by 1.1% in November, after a 0.6% drop in October. Nationwide’s figures for November showed a 0.8% fall – the biggest drop it had recorded in 12 years.

According to the Government figures, the average price of a flat was down by 0.7% in October; terraced housed were down by 0.4%. Conversely, detached homes experiences a 0.8% rise in prices.

Interestingly, despite the minimal growth, annual house price inflation was up to 11.3% in October, from 10.8% in September. The reason for this was that the 0.1% growth replaced a fall of 0.4% for October 2006.

Chief UK and European economist at Global Insight, Howard Archer, said: “While modest annual falls in house prices are highly possible in 2008 and prices seem set to remain pressurised for an extended period, at this stage we do not expect to see a sharp correction. We believe that the downside for house prices will be limited by a lack of supply, the increasing number of households, high employment and the fact that few vendors are currently having to sell for ‘distressed’ reasons.”

The latest figures showed that annual growth is now lowest in the North East at only 5.25%. The East Midlands currently has 6.4% growth and both regions are on the slide. Although Northern Ireland saw a slip in annual inflation, it sill leads the way in the UK at 32.5%. London is next with growth of 17.7% for the year, actually up on September (16.5%).