House Prices Up By Just 1% In 2011

House Prices Up By Just 1% In 2011

by Rebecca Hall on 3 Jan, 2012

According to the Nationwide Building Society, house prices rose 1% throughout 2011. Although prices actually dropped 0.2% for December, the year as a whole saw the average house price increase marginally to £165,798.

Nationwide’s chief economist Robert Gardner remarked “The 1% rise in house prices recorded over the past 12 months could hardly be described as a strong performance, but against a backdrop of anaemic economic growth and a deteriorating labour market, UK house prices were surprisingly resilient in 2011”.

Gardner continued, “Resilience was less evident in other areas of housing market activity in 2011. For example, the number of mortgage approvals remained low, at just over half the long-term average.”

Conversely, the Land Registry produced data for England and Wales but with an overall 1.9% decrease, which put the average price at £160,780. Interestingly, different regions faired quite differently. London saw a 5.5% increase for the year, which contrasted with Northern Ireland’s fall of 8.7%. Average London property price is now £342,749. Gardner points out that this was the second time in three years that London has topped the regional house price performance tables. He said, “Prices in the capital are now just 1.6% below their all-time highs, while in the UK as a whole prices are still 10% below their peak.” Prices in London were 0.8% up for December and 1.4% higher than last November 2010.

In the North East, prices are 5.4% less than a year ago. However, the South East prices are just 0.9% down, showing a North-South divide in fortunes. Worst hit was Hartlepool where the average property price was £76,663. This represents nearly a 20% price drop!

LSL Property Services director David Newnes says “The second half of the year has provided some positives. Mortgage finance is currently highly affordable as lenders have dropped their rates in line with the Bank of England’s commitment to the ultra-low interest rates policy. This means those who can put together a decent-sized deposit are currently able to lock themselves into cheap deals and can obtain properties at relatively affordable prices.”

2012 predictions? Rightmove is estimating 2% rise in prices in 2012.The Halifax has predicted anywhere between -2% and +2%. Meanwhile the Council of Mortgage Lenders showed that first-time buyers have continued to shy away from the property market. Loans approved for first time buyers fell by 10% in October compared to September 2011. The Council think there could be a flurry of activity in the early months of 2012, as the stamp duty holiday comes to an end on 24 March 2012.  Currently first-time buyers of a property valued up to £250,000 are exempt from stamp duty until then. After 24 March 2012, the only properties which will be exempt will be those under £125,000.

About the Author

Rebecca Hall

Rebecca Hall worked as an independent mortgage adviser for 10 years before turning to financial journalism full time. She has strong links to the CAB advising families on mortgage refinancing.