First drop in year on year price growth

  30th July ,2008

First drop in year on year price growth – house prices 1.5% lower than July 2007

The downward spiral of the property market has claimed a new benchmark as July 2008 marks the first time annual price growth has descended into negative territory.  Chesterton’s latest House Price Poll of Polls (PoP) reveals that house prices in July 2008 were 1.5% lower than a year ago.

The report, compiled by the Centre for Economics and Business Research (CEBR), revealed that house prices fell in all regions in July, with the average price of a residential property in England and Wales falling to £190,977, a 0.8% fall from June.  One year ago, the average house price was £193,819.

In terms of type of property, the average price of a detached house remained flat at £274,569 in July, while the price of flats fell 1.8% year on year to £168,231.

Douglas McWilliams, Chief Executive of CEBR, comments:

“The Chesterton’s House Price Poll of Polls for July shows the first fall in year on year house prices since the Poll began in March 2007, with house prices 1.5 per cent lower than July 2007. In recent months, the housing market slowdown has gathered momentum – transactions have all but ground to a halt with mortgage approvals at a record low in June and transactions in 2008 to date 41 per cent down from 2007. Prices look set to fall further, but in a gradual fashion as demand is hit by the dual shocks of the credit crunch and rising inflation.  Until banks fully recapitalise and inflation falls – allowing much-needed Bank of England rate cuts, demand looks set to remain weak.’

Robert Bartlett, CEO of Chesterton, comments:

“The housing market slowdown is persisting with transaction volumes down significantly.  The top of the market continues to outperform the bottom, with the top 20% of properties in England and Wales 0.8% higher than last year while the average house in the bottom 20% of the market is 1.4% down on July 2007. 

“Prices in London remain marginally higher than last year although performance varies considerably across the capital.  House price in Camden, for example, rose 11.3%, the strongest year on year growth in London while in the City of Westminster, prices fell 2.1% compared with a year earlier.” 

“Until we see an increase in credit availability there will continue to be downwards pressure on prices, but

I do expect that we will see an improving volume of transactions as unrealistic vendors become faced with the realities of corrective pricing. Certainly there are buyers in the market, but only at a price.”