Buyers nervous amid global unease
31 March 2003
House prices have stagnated this month amid fears of war, according to the latest reports.
Buyers have put moving plans on hold in response to global uncertainty, property website hometrack said.
The greatest falls have been seen in London and the south east.
Growth peaked at 2 per cent in May last year, but was placed at only 0.1 per cent in February and ground to a halt at 0 per cent in March.
The highest price falls recorded were in central London and the City and Berkshire, both at -0.4 per cent, and Berkshire and Wiltshire with prices falling by 0.3 per cent.
Seventeen counties altogether reported price falls and fourteen saw no change suggesting that the tide is turning on the rapidly escalating house prices we saw last year.
Price rises of 8 per cent in Cumbria and 0.4 per cent in the East Riding of Yorkshire were detected.
The average house price of the ten counties with the highest price rises is £101,400.
The average house price of the ten counties with the highest price falls is £228,860. Average house price for the country is £135,500.
Hometrack suggests that there is still more room for house price rises in those areas where housing is relatively affordable and these could still see a steady increase over the next few months, particularly in the North of England.
However, the sky-high prices seen in London and the Southeast look set to come down slightly, particularly if the global political and economic climates remain rocky.
Hometrack warns that there is presently very little excess demand to lift prices over the next few months and prices achieved as a percentage of asking price fell again for the tenth month in succession to 95%, the lowest for over two years.
On average, it is currently taking 5 weeks to sell a home and there are 12 viewings per property sold, according to the survey.
This is well down on the 2.8 weeks to sell and 9.0 viewings per sale recorded at the height of the boom in May last year.
John Wriglesworth, hometrack's housing economist, said, 'House price stagnation looks set to continue, led by a marked slowdown in activity in London and in the South East.'
'Despite low interest rates, high employment and growing income, the heat has definitely left the market.'
'Prospective home hunters are holding back from buying, not least due to worries and insecurity over the consequences of the war with Iraq. Fear dissuades people from moving and they stay put.'
Most lenders are currently choosing to limit their mortgage offers to 3.5 times their income, particularly in the higher value areas of London and the Southeast.
The house price to income ratio, however, is currently over 4.5, its highest point for over 10 years.
Mr Wriglesworth added, 'It appears that the prudence of lenders is helping put the brakes on house price rises. While they were happy to lend 3 times income when mortgage rates were 12 per cent ten years ago, they are reluctant to lend more than 3.5 times income even though mortgage rates are currently lower than 5 per cent. This is effectively putting a ceiling on the level of house prices at this time'.