House prices in January rose by 0.7% Page 4
The average price of all residential property transactions completed in England & Wales in January 2010 was 0.7% higher than in December. This is the ninth month in succession in which AcadHPI has increased on a monthly basis.
Annual price increase is 5.4% Page 4
On an annual basis, in January, the average price of all residential property transactions in England & Wales was 5.4% higher than a year ago - a significant market recovery. It is the third consecutive month in which the annual rate of change in house prices is positive.
December transactions are the highest for two years, helped by the stamp duty holiday Page 3
This was a strong end to 2009 which had seen the lowest number of annual housing transactions in England and Wales since the Land Registry began computerising its records in 1995. The market in December was assisted by an increase in the sale of properties valued below £175,000, with purchasers seeking to take advantage of the stamp duty holiday which ended on 31 December 2009.
Dr Peter Williams, Chairman of Acadametrics, said
“The average price of a home rose again in January 2010 and, at £215,016, is almost back to where it was in January 2007, three years ago. The increase of 0.7% is the ninth in succession, suggesting a recovery that is now well entrenched. However, the rise from 0.4% in December to 0.7% in January is modest, and it is hard to draw firm conclusions, given that the monthly increase had been slowing since September and there are strong regional variations in the recovery story. Without doubt, year end activity was heightened by the anticipated end of year closure of the stamp duty holiday for properties up to £175,000 which had been in place since September 2008 as we discuss later. This factor, along with historically low interest rates for some borrowers and much else, adds layers of complexity in trying to anticipate what the market might do next.”
“The average price of a home in England & Wales is now £215,016. At this level, it is still down £16,812 or 7% from its peak in February 2008 of £231,828, but prices have recovered significantly and the index is showing a 5.4% increase over the last twelve months. The fact that there remain strong regional variations in this reported trend does mean that household experience will vary considerably, although prices in all regions are currently moving in the same direction - upwards.
“It is clear that, with average monthly increases of 0.6% over the last three months compared to double that (1.2%) over the previous three months, price increases have been moderating, and it is too early to say with any confidence as to whether this trend will continue. Published house price forecasts for the year vary from plus 10% to minus 10%, which gives a clear sense of the current uncertainty. Total mortgage lending for 2009 was £143.5 billion gross and £11.5 billion net, down from £254 billion gross and £41 billion net in 2008. The latest Trends in Lending report published by the Bank of England in late January noted some improvement in credit availability and for higher loan to value ratios. The evidence supports the view that the thaw continues, but there is little to suggest there will be a sharp recovery in mortgage volumes. Furthermore, the recent statement by the Council of Mortgage Lenders concerning the need for continued governmental assistance for lender funding sends a clear warning of possible consequential future mortgage constraint, raised interest rates and falling house prices. Uncertainty alone will restrain the market.”
“Overall, the number of housing transactions in England and Wales has increased by 51% during Q4 2009 (October–December 2009) compared with the same three months in 2008. The year began on an all time low of 27,637 monthly transactions, representing a 60% reduction on the 15-year average for January of 67,378 monthly transactions. However, during the year the monthly transaction count rose, with December sales reaching an estimated 76,000, the highest level since December 2007 – a figure which will have been influenced by the year end cessation of the stamp duty holiday for homes costing up to £175,000. Some might say of the year – in like a lamb and out like a lion!
“The 51% increase in annual transactions has two distinct underlying trends. The first trend is of a North/Midlands/South gradation in the increase in the number of homes sold. In the Northern regions and Wales, the average increase in housing transactions has been 34% or less; in the Midlands the increase has been between 42% and 56% whilst, in the Southern regions including London, there has been an annual increase of 66% to 68% in the number of properties sold.
“The second trend is one of different activity levels by property type. Over the three months October–December 2009, compared with the same three months in 2008, increases in the numbers of properties sold have been as follows: detached 69%, semi-detached 61%, terraces 46% and flats 26%.
“Comparing Q4 2009 with Q3 2009 these trends appear to be changing. The increase in the number of housing transactions in London over the period is 0.2%, whilst in the rest of the country the increase has been an average of 6%. The volume of flats, terraced and semi-detached homes sold has similarly increased by 6% over this period, whilst sales of detached properties have increased by a more modest 1%. The mini-boom in the purchase of detached properties in the southern counties would thus appear to be over, at least for the time-being.”