The latest snapshot of the housing market in England & Wales taken by the Land Registry and published this morning shows that sellers have been accepting slightly higher prices in the past month with the average price of a home now estimated at £163,049, up 1.3% on the previous month but still down 2.1% on July last year.
Whilst homes in London and the South East once again faired better than average with prices in most London boroughs showing no change on the previous month but with some now showing a decline over the past year. Hammersmith & Fulham for example saw prices fall by 0.1% on June but still up 4.9% over the last year.
The North East suffered miserably once again with prices here down 2.3% on the previous month leaving them down 8.8% over the past year. Those who bought 4-7 years ago will only have put down 5-10%. In areas like the North East many of these people are now in negative equity.
With no sign of lenders relaxing the criteria they demand for those seeking a mortgage it remains extremely difficult for buyers to save what for many is more than a years salary to put down as a deposit. In 2007 with 95% mortgages common the typical first time buyer only had to save 36% of their yearly income.
An additional break on the market are the number of mortgage holders who have lost the equity they once had in their house. Even if they can sell, they have no money to put down for the next property. With around a quarter of all mortgage holders thought now to be in negative equity there are more than 2.5m home owners trapped with no way of moving on. These homes in turn are not available to the next generation to move into creating what can best be described as a constipated market.
The top of the market is now causing some concern despite prices for the very rich still rising. Volumes of sales of homes over £1m were down in May by nearly 45% on last year suggesting that even these fortunate few should be wary of the gangrene setting in lower down which could infect the whole of the market before too long. Either lending criteria needs to be relaxed or prices will surely fall.
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Link;- http://www1.landregistry.gov.uk/upload/documents/HPI_Report_Jul_11_ld2nw3.pdf