UK house prices fell 0.3 per cent last year despite price rises across 20 per cent of the country, according to Hometrack, and prices are expected to fall a further 1 per cent in the coming year. The number of post codes registering an increase in prices rose from 12 per cent to 20 per cent, but price falls were recorded across two-thirds of the country. The overall decline of 0.3 per cent showed a marked improvement on the 2.3 per cent fall recorded in 2011. But the recent trend is not encouraging, with a 0.1 per cent fall in December prices marking the sixth consecutive monthly decline.
Prices in London continued to provide a major pillar of support, with the percentage of post codes recording a price rise up from 42 per cent in 2011 to 70 per cent. But prices in the capital are now 10 per cent higher than they were at the peak of the market in 2007, and Hometrack believes that price inflation this year is set to moderate to around 2 per cent. And researchers at property agents Savills are even gloomier, forecasting no price increases at all in central London this year as higher taxes and weak economic growth rein back demand from overseas investors.
The broader market is also set for a long period of consolidation, according to agent Knight Frank, which does not expect house prices to reach their 2007 peak again until 2019, which would be the longest period between price peaks for more than 60 years. And stripping out inflation suggests that prices won't reach 2007 levels until 2031.
Meanwhile, the Council for Mortgage Lenders is forecasting 950,000 property transactions in the coming year, but expects this to fall next year to 930,000 if the funding for lending scheme is not renewed. Gross mortgage advances last year rose slightly from £141bn to £144bn, but net advances were flat at £9bn.
