House prices fall 1.3% in August

Friday 12th September 2008

House prices fell 1.3 per cent in August – dropping for the sixth month in a row and the largest fall since October 1992.

The FT House Price Index shows the average home is now 2.2 per cent lower than a year ago – making average prices worth £222,456.

This compares with a 5.3 per cent annual fall recorded by Hometrack and a 10.5 per cent fall recorded by Nationwide.

The FT finds only the north, south-east and London are yet to record annual house price falls – but the trends remain downwards.

Dr Peter Williams, chairman of Acadametrics, which compiles the FT index, said: “House prices peaked in February of this year at £231,908, since when they have fallen by around four per cent or £9,452 to £222,456.

"This takes the market average price back to where we were in May 2007. This is not a problem for the vast majority of households - nor is it market transforming in affordability terms."

He added the problem the property market was facing was due to the mortgage crunch and a fall in demand.

"Consumer confidence continues to fall reflecting the daily ‘bad’ news, the likely length of an extended housing market downturn and threats of a wider recession. Settling prices in such an environment is difficult," Dr Williams said.

"Prices achieved at auctions have been falling as buyers adjust their expectations downwards and we have seen the rise of gazundering in the mainstream market. The big question going forward is when and at what level will the market bottom out.”

Average house price growth in London is recorded at 1.8 per cent.

Greatest falls are recorded in Wales (down 3.7 per cent), the East Midlands (down 3.0 per cent) and the north-west (down 2.8 per cent).

On a district level, Windsor and Maidenhead has seen prices rise 19.2 per cent in the last year, while Anglesey property prices rose 8.6 per cent and Buckinghamshire values gained 7.2 per cent.

Wales dominated the house price falls with Rhondda Cynon Taff, Pembrokeshire and Ceredigion dropping between 6.0 per cent and 5.5 per cent.

Dr Williams explained: "Of the one hundred and eight districts and counties in England and Wales, only one recorded a growth rate in excess of ten per cent; one hundred and two had growth rates of less than five per cent and of these sixty-one saw price reductions, fourteen of them in Wales."

The FT Index is based on data from the Land Registry and an 'index of indices' based on other house price data produced.

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