News from the Residential Property Investor, the bi-monthly magazine for RLA members other artilces from the November / December 2002 issue RPI news archive

House price inflation lower - November / December 2002

Hometrack's national September survey of the housing market reveals house price rises averaging 0·6 per cent, continuing the trend of weakening inflation since May's high of 2·6 per cent.

Market activity has been affected by the quieter 'holiday season' but this lowering inflation also reflects the market regaining some stability. House prices have risen by 12·7 per cent since the beginning of 2002 and now look set to rise by 16 per cent this year (December on December).

Hometrack's Housing Demand Index experienced further narrowing as the number of number of active buyers fell by 2·2 per cent while the number of new properties registered rose by 2 per cent.

Again, it was areas away from the more expensive south east where the greatest rise occurred. Teesside (1·6 per cent) led the way, closely followed by Cornwall (1·5 per cent), Northumberland (1·5 per cent) and Tyne & Wear (1·2 per cent). At the opposite end of the scale, prices in central and City of London fell 0·2 per cent, while there was no change in Cambridgeshire, and only small rises in Gloucestershire (0·1 per cent) and East Riding of Yorkshire (0·2 per cent).

In cities, top price rises were in Newcastle (1·7 per cent), Exeter (1·7 per cent), and Preston (1·5 per cent). At the other end of the scale Cheltenham, Cambridge and Winchester all experienced house price falls (0·1 per cent, 0·2 per cent and 0·3 per cent respectively).

House prices achieved as a percentage of asking price fell for the third month in succession to 96·8 per cent but this remains well above last November's low of 94·7 per cent. Time to sell is a swift 3·6 weeks, again, well below the 5-week average reported in November last year.

John Wriglesworth, Hometrack's housing economist, commented: 'the housing market is slowing down to more sustainable rates of inflation. Despite the slowdown being partly seasonal, we do not expect house price rises to return to the heady rise recorded earlier this year. However, record low mortgage rates, rising incomes and low supply point to more house price rises to come, albeit more modest ones. We are now predicting 16 per cent price rises for this year (December to December) and 8 per cent for 2003 ­ still a booming market in comparison with current retail inflation rates. I am confident that there will be no nineties-style housing market recession'.

The British Bankers Association has revealed that the value of mortgages approved in August was 15 per cent less than in July while the Halifax published average house prices for different regions early in October. These were:

• Greater London - £206,425
• South-east - £174,126
• South-west - £140,940
• East Anglia - £119,932
• West Midlands - £104,536
• East Midlands - £103,653
• Ulster - £79,907
• North-west - £79,205
• Wales - £76,359
• Yorkshire - £71,334
• Scotland - £68,648
• North - £68,010.

• Making representations
• Tenancy gains for unmarried couples
• Queen's speech
• In brief
• Inheritance tax clamp down
• House price inflation lower
• Housing benefit pilots
• Household debt management