Money News
The latest FT House Price Index, in association with Acadametrics, shows house prices in England and Wales remained static in March, following a three month run of growth rates hovering around zero followed by a 0.5% blip in February.
On an annual basis, prices increased by 5.4%, down from 6.1% in February. This is the seventh successive month in which the annual rate has fallen and the lowest annual growth rate since April 2006.
London continues to be out of step with the rest of England and Wales, with an annual growth rate of 12.3% (averaged over the last three months) which is some 5% points higher than the next highest region. Even so, house prices in the capital are continuing the downward trend observed over the last few months.
Outside London it is the southern regions, South West (5.1%) and South East (7.2%) that have recorded the largest annual increases. But 7 of the 10 regions in England and Wales now have an annual growth rate below 5%, whereas a year ago none were in this position. And three regions, the North, West Midlands and Wales presently have an annual rate below 2%.
Overall, the evidence of a market slowdown is strengthening, but any correction must be viewed in the context of the strong performance of the market over recent years and the strong fundamentals underpinning the market, i.e. continued demand and limited supply.
Dr Peter Williams, Chairman of Acadametrics, says that at present, there is nothing to suggest that this downward trend won't continue in the short term even though the fundamentals of demand and supply, employment and interest rates remain very favourable.
London, the South East and the South West have now recorded seven monthly falls in the annual rate of price inflation - together they make up over 40% of the market - giving significant momentum to this price adjustment.
"With continued problems of liquidity and funding and these feeding through into the reduced availability and higher price of mortgage products, affordability is being squeezed despite static prices, and transaction numbers are continuing to fall.
"The next few months will be critical in terms of likely outcomes with much turning on the part played by the Bank of England," says Williams.
11 April 2008 © Moneyextra.com
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