House prices increase 0.2% in August
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House prices have increased by 0.2% in August, the LSL/Academetrics House Price Index shows.
London saw exceptionally high demand with a 22% jump in sales while the rest of UK remained static.
But the annual growth rate slowed to 7.7% on last year.
The average price of a UK home is now £222,454, down just 4% on its February 2008 peak.
David Brown, commercial director of LSL Property Services, says: “In the short term we expect small fluctuations but no significant dip in the wider market. Regional differences may be quite stark as some areas of the country feel the effect of cuts more than others.
“Active first-time buyers are the key to a healthy housing market and most are waiting for more attractive products from lenders before they make a move.
“Lending has been broadly flat and house price growth has slowed, with neither likely to pick up again until positive economic news helps to ease lending conditions. Lenders and the government must perform a financial balancing act to ensure supply does not begin to pull away from demand.”
Peter Williams, chairman of Acadametrics, says: “Whilst the possibility of house price falls certainly exists, much will turn on what happens to the wider economy both here and in the USA.
“Falls are reported in the reservations for new homes and the Bank of England Trends in Lending report for August suggested that mortgage lending for home purchases and remortgaging was broadly flat.
“Offsetting these clear negatives are the continuing unmet demand for housing, the steadily growing shortfall in newly built homes and the evidence of strong local and regional variations. Much turns on area and property type and there are some active markets where prices continue to rise. Given the negativity that surrounds the market, it behoves buyers to choose carefully.”
Richard Sexton, business development director at e.surv, says the figures mirror the data that his firm is seeing, with one exception - the figures for London seem too low.
He says: “The market is fragile and I’m not surprised that prices are so static. As for transactions, if anything, the 22% increase in London seems too low. The number of valuations and surveys we carried out in London increased 25% in the year to August 2010 compared to 2009.”
But he says that it’s tricky to forecast if the London surge will bleed out across the rest of the country.
He adds: “it’s impossible to tell how consumer confidence will be affected by the austerity measures that are yet to be announced.”
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