The value of residential properties in the UK remained largely unchanged between December and January, while prices fell by 1.6 per cent year-on-year, the latest Hometrack Monthly National Housing Survey has revealed. The figures are similar to those recorded by the Land Registry, with the organisation recording a 1.3 percent annual fall in house prices in December last year.
Commenting on the data, chief UK and European economist at IHS Global Insight Howard Archer predicted the cost of buying a home in the UK will slide by around five per cent over the course of 2012. "We suspect that low wage growth, a markedly-weakening labour market and major concerns over the economic outlook will limit potential buyers and weigh down on house prices," he stated.
Hometrack, meanwhile, has estimated there will be no national rise in property prices for 18 months, although director of research at the firm Richard Donnell acknowledged London is likely to buck the trend thanks to the high number of overseas investors targeting properties in the capital's prime districts. He added there has been a significant decline in the number of buyers registering with agents, with the eurozone crisis and concerns over the UK's economic performance both causing demand for real estate assets to fall in the second half of 2011.
The Hometrack report also highlighted a seven per cent reduction in the level of supply on the UK's residential real estate market during the final half of 2011, adding a contraction of this extent has not been recorded since 2009. Meanwhile, Mr Donnell predicted only a "modest improvement" in demand for homes over the next few months. "The net effect will be a continued negative balance between supply and demand pointing to further downward pressure on prices in the months ahead," he concluded.
