This is the seventh consecutive month in which the market has seen a marginal gain in price. Year on year house price growth slowed yet again, down to 5.9%, and will slow further as the larger gains of a year ago fall out of the calculations.
The number of transactions in November fell by 4.6%, in the month, and are down 5.3% compared to last November. This is the second consecutive month this year in which transactions are lower than 2009 levels.
David Brown, commercial director of LSL Property Services, comments:
"We have now seen prices creep upwards for seven consecutive months and this shows that there is strong demand for properties despite the considerable barriers facing buyers trying to obtain finance.
"The average LTV on a house purchase stands at 57%, which continues to hold back those without sizeable deposits – particularly buyers hoping to get on the ladder for the first time. With inflation still 1.2% over target a rate rise in 2011 is on the cards and there isn’t much chance of lending criteria loosening in the medium-term.
"Given that growth is marginal, we may see prices begin to fall slightly as these factors take hold, although it’s unlikely that any dip will be dramatic and the year-on-year drop in transactions is distorted by the end of the stamp-duty holiday in 2009.
“The market for those with a large amount of spare cash still represents good value, as more and more sellers are coming into the market willing to listen to offers well below asking price. This is stimulating demand, but in a rather disparate way around the country.
"In London, the last quarter has seen strong growth, with prices rising by 10%, while in the same period northern regions have registered no growth at all. This disparity is likely to increase following the spending cuts in the New Year as some regions will be hit much harder than others. We are likely to see London advancing further, with very limited growth in northern regions.”
Dr Peter Williams, housing market specialist and Chairman of Acadametrics, comments:
“The average price of a home in England & Wales is now £224,758. At this level, it is still down £7,070, or 3.0%, from the peak in February 2008 of £231,828 and we estimate that the number of transactions in November will be well down on the previous month.
"Over the last nine months, we have witnessed very modest changes in house prices with the average price rising by just 0.6%. However, as we show below, this single average figure masks some significant movements in both prices and transactions at more local levels.
“On an annual basis, our Index shows an overall positive 5.9% increase in prices over the last twelve months, but this growth mainly reflects movements in prices during the first three of the last twelve months. This month, the North becomes the first region in England and Wales to be recording a 2010 fall in house prices on an annual basis.
"House price falls, on an annual basis, in any region were last seen in November 2009, following which the housing market throughout England & Wales emerged quite strongly from the recession before falling away again.
“The regional data suggest that the North might soon be joined by other regions although we would not want to suggest that every region will follow such a pattern. Five of the ten regions are still showing annual growth in excess of 5%, with the West Midlands bucking the trend by recording an increase in the annual rate over the last month, giving further credence to the view that economic recovery is spread unevenly across the country.
“Developing this trend analysis at a more local level, on a 3 month annual basis, we note that 13 London boroughs are showing greater than 10% annual growth, together with 8 districts, whilst 1 London borough and 18 districts reported less than 1% growth. 11 of the districts were, in fact, reporting price falls, on an annual basis.
“What is a complex pattern, poses a considerable challenge to the reporting of an average house price across England and Wales because, however statistically correct, a national average will generally not reflect what people experience locally and may merely serve to confuse.
"The LSL/ Acadametrics Index will continue to pay close attention to these sub-national movements. Moreover, as we show below, there are also a range of averages, differently calculated, reported by the different indices. Whilst we do not offer a forecast of the 2011 LSL/Acadametrics index, it is clear that expectations are that the 2011 index will look very similar to the index in 2010.
"Indeed, on 29th November, the newly created and independent Office of Budget Responsibility produced its first economic and fiscal outlook for the UK, and this included a downbeat assessment of the housing market, with a forecast 1.4% decline in prices to the fourth quarter of 2011 and ‘muted ransactions growth’. However, the OBR suggests that ‘transactions will return to their trend level in the medium term’.
“To conclude, we note that, overall, 2010 has seen a flat market but one with some significant regional and local variations of which buyers and sellers need to be aware. Going forward, we expect to see a similar pattern in 2011.”
Richard Sexton, director of chartered surveyors e.surv, part of LSL, comments:
"Although, thanks to cash buyers, some prices continued to edge upwards, particularly in the South East, there's a lot of regional variation with some parts of the country, especially in northern regions, struggling to make headway.
"Their prolonged weak performance is being sustained by the constant drip of new properties put on the market by sellers gradually despairing of waiting for prices to recover.
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