Transactions up 20% in June, much faster than usual seasonal uptick, although activity overall remains quiet.
House prices lag behind consumer prices and incomes since 2006.
Richard Sexton, business development director of e.surv comments:
“In the current market, a monthly fall of 0.8% is relatively large. The greatest downward driver on national prices is the decrease in the price of high-value homes due to a slump in demand following April’s Stamp Duty rise for homes worth over £1 million.
"A flurry of activity in March saw transactions for £1 million plus properties rise 58% higher than the level of March 2010 and this created a temporary spike in prices in this sector of the market which has now evaporated.
"Nonetheless, putting the fall down solely to high-value homes would ignore the weakness in the present market. 8 out of 10 regions in England and Wales showed price falls in the three months to June and this indicates the impact of the continuing shortage of mortgage finance.
“Where annual prices have fallen in the last year, the drop in property values seems to be stimulating transactions. In Yorkshire and Humber, which has seen transactions grow faster than anywhere else in the country, prices have fallen over the last year by 2.7%.
"In London, where the price increase of 5% since June 2010 was greater than in any other region, year on year, transactions are growing more slowly than anywhere else in the country.
"The annual price falls outside London and the South East are beginning to increase demand as the affordability of properties improves, which will begin to put a brake on the fall in prices nationally.
“Our analysis this month also reveals the performance of property as an investment over the last decade. While prices rose by 79% in the five years to 2006, they have increased by only 11% between 2006 and 2011.
"That means in the last 5 years house prices have grown more slowly than inflation, which has risen by 17% since 2006, and also more slowly than salaries, which have increased by 15% in the same period.
"While the rapid gains of the first part of the decade look unlikely to return in the near future, buyers able to obtain mortgage finance are finding property getting more and more affordable relative to their incomes. Deposits required for first time buyers still remain a barrier however.”
David Brown, commercial director of LSL Property services, comments:
“The ongoing shortage of mortgage finance is taking its toll on house prices, and the requirement for substantial deposits is unquestionably the main stumbling block for the first-time buyer market. The good news is that there have been an increasing number of higher LTV deals trickling onto the market in recent weeks.
"But with doubts lingering over unemployment this year, and the anaemic growth in the economy, credit conditions remain tough and lenders are unlikely to abandon their cautious stance and completely open the taps for buyers without very large deposits.
"With the provision of social housing not up to scratch to meet the accommodation needs of Britain’s increasing population, the onus will remain on the private rental sector to soak up demand from the growing number of frustrated buyers.”
Dr Peter Williams, housing market specialist and Chairman of Acadametrics, comments:
“The average price of a home in England & Wales at the end of June now stands at £219,365, a level last seen in January 2010 and a -0.8% reduction on May.
"The modest gains in house prices over the last eighteen months have therefore disappeared, although the June 2011 price is still significantly higher than the £200,234 reached at the low point in the last recession (April 2009).
“The fall of -0.8% in prices in both May and June is a relatively big monthly change in today’s market, although not by historic standards.
"The fall in prices has probably been driven by the reduction in the number of high value sales in these months, as a consequence of sales being brought forward, during March and the first five days of April, to avoid the extra 1% stamp duty on properties costing £1 million or more which came into force on 6th April 2011.
"Figures produced by Land Registry show that there were 805 properties sold in March 2011 having a value in excess of £1 million, of which 517 were located in Greater London. This number of sales of high value properties represented a 58% increase over March 2010 levels, with the increase in properties selling for £2 million or more showing an 87% rise.
"We estimate that this increase in high value sales increased the LSL/Acadametrics average house price by approximately 1.1% in March."
