House prices fall by £1000 a week

Latest figures released this morning by Communities and Local Government confirm that house prices are falling fast with the average price in February down to £217,000 from £221,000 in January. This confirms my own observations of the market which sees average house prices falling by about £1,000 a week at present.

According the the Governments own statistics, annual house price inflation in Scotland was 9.7%, in Northern Ireland 3.7%, Wales 3.8% and in England 6.6%. Prices fell 0.5% for the quarter ending February 2008 but since these figures are based on about 50,000 sale completions – most of which would have been agreed last year we should expect these figures to continue to fall.

Like all historic surveys this one tells us what things were like three or four months ago. As most people know, the market today is suffering from chronic funding problems which we hope will have been eased today when the PrimeMinister met with representatives from the banks and other lenders.

Although larger houses will have seen greater falls in real terms the average home is loosing about £1000 a week at present. Many vendors who are still ignoring advice and quoting last year’s asking price are finding that buyers are put off and as a result, currently only about 1 in 5 homes is finding a buyer. The RICS survey out this morning illustrates that surveyors are feeling equally gloomy and we must expect this to get worse before it gets better. 

Comments reported from the head of the Grosvenor Estate in London suggests that even those involved in the top end of the market are concerned and I share Jeremy Helsby’s view that the market – even at the top could fall by up to 20% from it’s peak last year. In my experience, wealthy people are usually rich because they are sensible and I think it’s unlikely that they will continue to pay over the odds for property for themselves when they can see buying opportunities lower down the market.