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House prices begin the year with a fall

House prices begin the year with a fall

Category: Mortgages

Updated: 11/02/2011
First Published: 11/02/2011

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 It is now over 6 months old so the content may be out of date.

There has been no renewed recovery in house prices at the beginning of this new year, as figures show a slight fall in January.

Figures from LSL Property Services/Academetrics have revealed that prices fell by 0.1% in the first month of 2011, taking the average house price to £221,211.

Annually, the average price of a property in the UK has risen by 0.6%, although the pace of change has slowed dramatically in recent months, and looks likely to fall into negative territory sooner rather than later.

Twelve months ago, figures showed an annual rise in house prices amounting to 10.3%.

As well as falling prices, the housing market is also having to contend with historically low levels of activity.

The number of completed transactions is now just 60% of the long term average, with only 40,600 completions in January.

David Brown, commercial director of LSL Property Services, said there is a bubble of increased activity at the higher end of the market, with people looking to hurry through purchases of £1 million homes before a rise in stamp duty in April.

"However, transaction levels across the rest of the market are still being suppressed by the lack of high loan-to-value mortgages available for first-time buyers," he added.

"At a time when wage inflation is being outstripped by inflation, would-be buyer financers are under increasing financial pressure and providing the large deposits required by lenders is unachievable for thousands of potential first-time buyers."

Separate data from the Council of Mortgage Lenders show house buyer numbers rose slightly last year.

There were 529,300 new loans made to house buyers in 2010, up 3% from 2009, with their value rising 11% to £77.1 billion.

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