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House prices ‘remarkably resilient’ in 2011

House prices ‘remarkably resilient’ in 2011

Category: Mortgages

Updated: 13/01/2012
First Published: 13/01/2012

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House prices fell by 0.5% last year, but showed 'remarkable resilience' in the face of a number of challenges.

Figures from LSL Property Services show that the average price of a property in England and Wales fell by 0.5% in 2011, ending the year at £220,385.

In the final month of the year, the average house price inched up by 0.2%.

Richard Sexton, director of e.surv, said that December rounded off a year of economic turmoil in which property prices displayed 'remarkable resilience'.

"Despite the growing fears of a debt crisis in the Eurozone, prices rose 0.7% in the second half of 2011 and, with high inflation and reasonably static prices; this has helped make property more and more affordable," he added.

Last year was something of a tale of two halves, with property values falling by 1.8% in the first six months of the year, then increasing by 1.3% in the second half.

However, Peter Williams, chairman of Acadametrics, pointed out that the price recovery in the second half of the year took place because of a 'summer bounce' in July and August – a trend not repeated in the remainder of 2011.

London bucked the national trend, with property prices increasing by 3.1% over the 12 months.

Property prices in the capital have consistently performed better than the rest of the country, as demand has remained strong.

Wales was the only other region to record a rise in prices in 2011, with values increasing by 0.7%, which was in part driven by prices in Cardiff rising by 11% in the last six months alone.

Mr Sexton said that despite prices showing such staying power in 2011, 2012 is set to be another tough year.

"With the global economy in a parlous state, the size of mortgage advances, which rose in the last 12 months by 3.5%, could begin to decline," he added.

"The stamp duty holiday for first-time buyers will end in April which means first-time buyers will have to stump up an extra £2,200.

"This is likely to create a rush in the first part of this year at the lower end of the market as buyers scramble to avoid the purchase tax – after that, we could see first-time buyer activity fall sharply."

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