Decline in houses prices revealed

For sale signsHouse prices fell in nearly 80% of postcodes across England and Wales over this year, but the strength of the London market boosted by demand from overseas buyers prevented the overall decline from being even worse, property analyst Hometrack has said.

Average prices declined by 2.1% overall, but in some of the most desirable areas of London they went up by as much as 5% over 2011, recording an average increase of 1% across the capital.
Some 78% postcodes across England and Wales registered house price falls over 2011, but prices have gone up across 43% of London areas during the same period, with the main hotspots concentrated in central and west London. The study did not list the areas which have experienced the worst declines over the year.

Despite the more positive outlook for London, Hometrack expects prices to fall by another 3% across England and Wales by December 2012, and rents to rise by 2% as buyers who cannot get onto the property ladder remain trapped in the booming rental sector.

Richard Donnell, director of research at Hometrack, said: "The strength of the London market, where prices are up 1% and by more than 5% in central London, has flattered the national picture.

"Strong international and domestic demand saw prices in the more affluent parts of the capital rise over 2011."

Prices in around three quarters of postcodes in south-west and north-west London rose. More than 95% of prime central London also saw increases over the year and this area also experienced rises of 5%.

This year's overall decline is sharper than a 1.6% fall in house prices experienced in 2010, the study found. The time it takes to sell a property currently stands at 6.5 weeks in London and 13 weeks in the East Midlands.

The study also highlighted a "widening imbalance" between supply and demand as uncertainty over the economy has grown, indicating that prices are going to fall further as demand has dropped off.

The first half of 2011 saw a "bounce back" in demand with new buyers rising by 14%, but demand then fell by 11% during the second half of the year as the eurozone crisis unfolded.

© 2011 Press Association
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