During the month of September, house prices fell by 0.4% which makes it the third consecutive monthly fall - thus offsetting completely the rises of May and June.
The average UK house price in September 2012 was 0.3% lower than in December 2011, at £159,486. Prices in the three months to September were 1.2% lower than in the same period a year earlier. This measure of the annual rate has moved outside the narrow range of 0% to -1% for the first time in seven months.
Activity remains subdued but stable. Home sales have been very stable in recent months, at between 75,000 and 77,000 per month between May and August. Overall, sales in the three months to August were 3% higher than in the same period last year.
The relatively low level of mortgage payments in relation to income continues to provide support for house prices. Mortgage payments for a new borrower remain significantly below the long-term average as a proportion of disposable earnings. Typical mortgage payments for a new borrower - both first-time buyers and homemovers – at the long-term average loan to value ratio, have nearly halved as a proportion of disposable earnings from a peak of 48% in 2007 Quarter 3 to 26% in the third quarter of 2012. This is significantly below the average of 36% recorded over the past 27 years.
Commenting, Martin Ellis, housing economist, said:
"Overall, there has been very little change in the average UK house price so far this year. There is, nonetheless, evidence of a slight deterioration in the trend recently with prices in the three months to September 0.5% lower than in the previous quarter. The average price fell by 0.4% in September; the third successive monthly decline.
"The generally weak economic climate remains a significant constraint on housing demand. The relatively low level of mortgage payments in relation to income, however, continues to provide support for house prices. We expect house prices to be broadly unchanged over the rest of this year and into 2013."
Matthew Turner, director of Astute Property Search, commented on the figures:
"The 0.5% decline over three months is consistent with the general malaise within the economy.
"But while demand certainly remains weak, we have seen a seasonal pick-up in buyer activity in recent weeks as people seek to have their home moves wrapped up before Christmas.
"While low mortgage payments may be supporting house prices, the ongoing difficulty to secure finance at higher loan-to-values is preventing the market from moving forward.
"Until the LTV deadlock is broken, the housing market will remain in a limbo. What's very clear is that the UK property market is becoming increasingly fragmented. Some areas, especially in the North, are really struggling while some areas in the South are proving very resilient.
"Easily the strongest pocket of resistance is the capital, which continues to shrug off the woes elsewhere in the market. While the rest of the UK languishes, London seems to be laughing it all off."
