Average Drop in House Prices for the UK Market

Despite a momentary rise in property prices throughout the UK at the beginning of October, new information published as part of the Land Registry's annual report shows house prices have and will continue to fall throughout the remainder of the year in keeping with what has been a 2.6 percent drop in 2011.

The national average asking price for a house now stands at GBP162,109, although there remains a significant divide between asking prices for homes in the North and South of England. Indeed, the gulf between average North South asking prices is now at the highest levels ever recorded, with homes in the South now valued at double those of the North. The average home in London is now valued at GBP349,026 according to the latest monthly figures, which, although significantly higher than the national average, still marks a 1.2 percent decline over the last 12 months. The North of England has recorded a substantial decline of 8.3 percent annually and a monthly price drop of 3.9 percent, meaning that the average house in the North is worth GBP100, 616 or less than a third the value of those in London.

The limited availability of properties within the capital has managed to constrain market drops, with some of the more exclusive areas such as the Kensington and Chelsea boroughs experiencing as much as an 11.2 percent increase in value. However, the October 2011 Land Registry assessment shows that although sales volumes have increased by around 5,000 transactions more than 2010, these statistics are testament to the reduced levels of availability more than any increase in buyer demand.

The latest figures released show a completion rate of minus 11 percent on the previous year, prompting speculation on what the causes of this customer reticence may be. The most popular hypotheses attribute these signs of anxiety to the recent Eurozone crisis, which has resulted in many would-be sellers holding out for the New Year before listing their properties in order to assess the impact on property prices of heightening concerns and bailout measures in Italy, Greece, Ireland and Portugal.

As such, property prices are expected further decline over the next 3 months and, according to the Royal Institution of Chartered Surveyors, will continue to decline in real terms by around 10.5 percent over the next five years due to valuations not keeping up with increases in inflation. This rate of decline will however, remain consistent in terms of percentages, providing no immediate cause for alarm or overly precautious buyer and seller behaviours in the coming year.