Past Market Performance: Property Prices Start to Freeze
Recent property price reports which measure what's happened to property prices in the past suggest that 2011 was a year where prices rose until the summer, then dropped back again, in the main to slightly lower than 2010 prices.
Key ‘past market performance' indicators are the Land Registry which measures the average price of properties sold, including cash sales, which is accurate from a historical perspective, but not relevant when looking at what's happening in the market currently. The survey suggests prices at the start of 2012 have slowed following a flurry of activity in the summer period which has continued to drop off to the end of 2011. They report property prices are down by 1.3% year on year.
Volumes year on year are down, only by less than 1%, but this, along with other data suggests market volumes are weakening. This is significant for those looking to sell this year as lower volumes typically mean prices are likely to fall in the coming months. Taking the heights of 2007 as a benchmark, property volumes continue to suffer much more than house price falls. Back during the market heights, the average monthly volume in England and Wales was approximately 89,000 sales per month. At its lowest in 2009, the average monthly volume was 52,000 - a fall of 40%. Current volumes are running higher, but not by much: 60,000. This still represents 30% fewer homes being sold versus 2007.
Average House Prices for 2011 - England & Wales
The Nationwide survey which is more up to date than the Land Registry (December data) and includes data to January 2012, suggests property prices have fallen slightly month on month while they are up by just over half a percent versus January 2011 to £162,228.
Nationwide say "The demand/supply may move further in favour of buyers in the months ahead.... house prices are likely to continue to move sideways or only modestly lower in the months ahead".
Acadametrics data is based Land Registry data and as such measures cash sales. This is significant as currently, many pundits estimate cash sales make up more than a third of sales. Their index uses a methodology designed to provide a "true measure of house price inflation". Their prices are smoothed to show underlying trends and the prices tend to be higher as they include all the sales recorded as opposed to samples or ‘an average house'.
Their December data suggests a larger fall than Nationwide with month on month prices down slightly and annual house prices down by 1.4%.
Acadametrics says "The twelve month story is that prices fell (-1.8%) in the first six months of the year and rose (+1.3%) in the second half". Moving forward they suggest "unemployment will rise and the supply of mortgage finance will remain tight" for 2012 and "arrears and possessions might edge up a bit". They believe (subject to interest rates or unemployment rising) "existing owners... should not see the value of their homes radically reduced".
Summary of Past Property Prices
2011 was a year where prices rose by a few percent and then dropped back to levels slightly below 2010 levels, although the market is proving fairly stable considering the economic ups and downs. In the past, gloomy economic news has lead to the market stalling. However, what we are noticing is people are becoming somewhat ‘immune' to the bad news.
For example, in the summer property prices ‘bounced back' according to Acadametrics, yet this was exactly the time when all the bad news was erupting over the Euro and the UK heading back into recession. It was also the time when incomes were starting to be impacted by the Coalition cuts.
From a regional perspective, the national picture continues to hide hugely different market performances from one area to another. Regionally, markets are performing completely differently and when we drill down to county levels, the differences are even starker.
National Picture vs Regionally
The "big news" in the property market from a regional perspective is that some areas (on average) have fallen below the low levels seen in 2009. The North East, Yorkshire & Humber and the North West average prices are now below previous lows, suggesting a double dip in house prices in these areas.
It is worth remembering though, this doesn't mean every property's price in the region is falling to this extent, within the North East there will be areas stabilising as well as falling. Even the regional variations hide bigger differentials at a more local level. For example, London's best performing area shows prices up by 9% year on year in the City of Westminster and over 7% in Kensington and Chelsea, while Newham is down by 2.5% and Barking and Dagenham by 2.2%.In other areas across England and Wales, Poole is up by 4.3% while Hartlepool is down by a massive 17.5% year on year.
To find out what's really happening in your area, you need to talk to local property experts such as estate agents and surveyors and study the figures for yourself to find out whether your market is going up, down or staying the same. You can also go on-line and read our article on ‘How to spot the bottom of the market'
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