The FT House Price Index, produced by Acadametrics and based on completed property sales, shows that house prices in England and Wales rose by 0.5% in November, down from 0.7% in the previous month. On an annual basis, prices increased by 9.1%, down from 10.2% in June and the lowest annual growth rate since January.
London remains completely out of step with the rest of England and Wales, with an annual growth rate of 18.5% (averaged over the last three months) which is nearly double the next highest region. Outside London the southern regions, South West (9.0%) and South East (9.7%) have recorded the next largest annual increases (again averaged over the last three months). Overall, there is continuing evidence of the market slowing, 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, ie continued demand and limited supply.
Dr Peter Williams, Chairman of Acadametrics, comments: "House prices in England and Wales increased by just 0.5% in November, suggesting that last month's rise of 0.7% was a blip. On an annual basis, the rate of house price inflation has continued the downward path recorded since June, and is now 9.1%, the lowest level since January this year. The FT index is based on all property transactions in England and Wales, and our evidence of a softening market is very much in line with other indices despite the different reporting bases. The prices on which the FT index is based reflect transactions agreed some weeks ago. With continued weakening in consumer confidence and the further negative commentary on market prospects in 2008, we would expect this downward trend to continue. This is despite the strong fundamentals in terms of continued demand and limited supply and the possibility of cuts in the Bank base rate.
"London had a strong month and this helped keep prices higher. If we strip London out of the assessment, the overall monthly increase for England and Wales was down by 0.2% to 0.3%, and the annual rate to 6.7%, ie well over 2 percentage points lower.
"The current state of flux in the funding markets, and the tightening of the access to and the cost of credit, suggest that 2008 will be a challenging year and one in which house price prediction will be particularly difficult. However, any suggestions of a significant fall in prices must be placed in the context of the strong performance of the market in recent years. Since 2000 the annual rates of growth at November have been as follows; 13.6% (2000), 11.3% (2001), 21.9% (2002), 13.1% (2003), 13.5% (2004), 3.1% (2005), 8.2% (2006) and 9.1% (2007). In 2000 the average price was £108,891; it is now more than twice that at £230,504. Decelerating house prices in 2008 reflecting a modest market correction have to be seen in that context."
