The latest Land Registry House Price Index was released today, recording a negative month-on-month house price change in October for properties in England and Wales.
The headline number is -0.8 per cent (bringing the average house price to £165,505). The fall is the biggest recorded by the index since February 2009, and narrows the year-on-year gain to 3.4 per cent. Prices are still higher than they were a year ago – but a slowdown cometh.
There’s not a great deal else to add, except to mention that…
1) There’s a significant amount of regional variation, notes Simon Rubinsohn, chief economist at the Royal Institute for Chartered Surveyors (map from Land Registry Index):
He also believes this pattern could become familiar:
…the likelihood is the divergence in pricing between different parts of the country will become more marked over the coming year as public spending cuts begin to bite.
2) Don’t expect downward pressure on prices to ease up thanks to eager buyers, says Howard Archer of IHS Global Insight:
In our view, the housing market has got little going for it at the moment, apart from low mortgage rates – and that is if you can get a mortgage!
Although as Simon Rubinsohn cheerily notes, mortgage or no, a housing shortage is the real issue of the day:
However, the latest estimate for the growth in households in England over the next 25 years published by CLG today provides a timely reminder of the structural imbalance that persists in the housing sector whatever the short term trends. While the number of households in the country is projected to grow by 5.8 million or roughly 232,000 per year over the period, housing starts are running at barely 100,000 per year. Even if the New Homes Bonus planned by the government has some success in encouraging a higher level of delivery of residential accommodation, it’s hard to believe this alone will be sufficient to close this yawning gap.
Related link:
Taking the temperature on housing – FT Alphaville