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House price warning that London masks reality

House price warning that London masks reality

Category: Mortgages

Updated: 11/10/2011
First Published: 11/10/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

House prices outside of London could have fallen by as much 10% over the past year, homeowners have been warned.

According to the latest official figures from the Department for Communities and Local Government (DCLG), house prices in the UK in August were 1.3% lower than a year earlier at an average of £208,476.

However, it has been suggested that a boom in London property prices is currently disguising the extent of some of the falls likely to have been seen elsewhere.

Nick Hopkinson, director of property company PPR Estates, said the headline data was very misleading as it includes 'the millionaire enclaves' in the capital where prices have soared as a result of foreign investors snapping up property to protect their wealth.

Doubt was also cast over the validity of the DCLG's claim that the price of new properties was 9.2% higher than a year earlier, with Mr Hopkinson suggesting values had only increased because developers were starting to focus on larger, more expensive family homes and prices had partially recovered since the credit crunch.

Claiming it was likely that most new-build city centre flats are worth 20% less than they were three years ago, Mr Hopkinson added: "The hidden reality behind the national average numbers is that many properties outside London have seen prices fall by over 10% in the last year.

"With the current Euro debt uncertainties, the wider economy flirting with recession again and inflation squeezing the Great British middle classes 'till the pips squeak', it's difficult to see any real prospects of house price growth in the foreseeable future for most of us."

Elsewhere, the latest research from the Royal Institution of Chartered Surveyors (RICS) has suggested that prospective home movers are opting to stay put amidst concerns over the state of the economy.

Surveyors reported that new instructions from people looking to sell fell back during September as a result of fragile consumer confidence.

RICS housing spokesperson Michael Newey said it was hard to see what could give the market a lift in the near term, but suggested that the new round of quantitative easing would at least help to keep mortgage rates down.

"This, if nothing else, should ease the pressure on existing homeowners and limit the risk of a material pick-up in repossessions," he added.

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