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House prices edge higher despite gloomy forecast

House prices edge higher despite gloomy forecast

Category: Mortgages

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

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 It is now over 6 months old so the content may be out of date.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 climbed 0.2% higher in October as the property market malaise continued.

The average price of a property in England and Wales currently stands at £220,056, according to the latest LSL Property Services / Acadametrics research, some 1.3% lower than a year earlier.

With prices having remained static in September, all the signs are that the market is flattening out.

At the same time, the survey revealed a sharp fall in the number of property transactions completed, with uncertainty created by the problems in the Eurozone thought to be mostly to blame.

"At the end of the summer, a flurry of buyers jumped at the chance to take advantage of some extraordinarily low mortgage rates that were being rolled out," said Richard Sexton, director of e.surv.

"But last month growing fears about the Eurozone crisis caused lenders to rein themselves in, and that has reduced the volume of transactions."

Meanwhile, separate research from Savills suggests that the current fortitude displayed by prices might be about to come to an end.

According to the property broker, house prices are likely to drop 11% in real terms in the next five years, effectively returning to levels last seen in 2002 once the impact of inflation has been factored out.

Expectations of weak economic growth and constrained access to mortgage finance form the foundation of the gloomy forecast.

"It is testament to the resilience of the national market that the ongoing economic problems the nation faces have not caused property prices to fall further in the last 12 months," added Richard Sexton.

"This shows that where mortgage finance is made available, buyers still have a strong desire to step onto the ladder."

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