Saturday 23 February 2008

Property market  is still cooling down

The property market is still cooling despite a slight rise in prices in December 2007, government figures reveal.

Prices rose 0.5% in December compared with the previous month, according to the Department for Communities and Local Government (DCLG).

But the annual rate of house price inflation was 9.2%, down from 9.8% in November and the second consecutive monthly fall.

The DCLG said the UK annual house price inflation rate for the last three months of 2007, considered a more reliable indicator of the market, fell to

The DCLG said the average price of a home in the UK was £219,591. The figures are the latest to suggest a cooling in the housing market, with the 10% from 10.5%.

Prices in December were lower than they were in September and October, the statistics show. The rise between November and December was the result of increased prices of detached houses (up 1%), terraced houses (up 0.6%), flats (up 0.5%) and semi-detached homes (up 0.2%).

But this was offset by a fall in the price of bungalows by 2.3%. At its December meeting the Bank of England cut interest rates from 5.75% to 5.5%.

The Bank's Monetary Policy Committee decided to drop the rate by a further 0.25% last week, with many economists expecting further cuts during the year.

The DCLG statistics lag behind other house price indexes as they are based on sale completions, rather than mortgage approvals.

The Halifax, the UK's biggest mortgage lender, said annual house price inflation was 4.5% in January, down from the previous month's figure of 5.2%.

Nationwide said the annual rate of price growth dropped to 4.2% in January, which was the lowest rate since December 2005.

A tighter credit market and weakening consumer demand as well as rising fuel and food bills have all been highlighted as reasons for slowing growth.

The highest annual rate of inflation, when the figures were broken down regionally, was the 13.5% in London. The lowest was 4% in the West Midlands. In Northern Ireland, annual house price inflation fell from 17.4% in November to 12% in December. In contrast, Wales saw an increase from 6% in November to 6.1% the following month.

The UK house price inflation rate fell more for people who were selling a property to buy another (9.7% in November to 9% in December) than for first time buyers (9.8% to 9.5%).

The average price paid by first time buyers across the whole of the UK was £166,734 in December, compared with £245,522 paid by former owner occupiers.

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