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Are house prices set for a fall?

The market data is painting a complicated and cautious picture, but house prices are still going up in many places across the nation.

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The housing market is looking set to slow with gloomy figures being reported by major lenders and property agencies.

However, the picture is complicated with house prices rising and falling at different rates across the UK’s regions. And despite the gloom, average prices are up across the UK, with mortgages more affordable than at any point since 2007.

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London house prices falling at fastest rate since 2009

The average price of London homes fell 3.2% between January and March compared with the previous quarter (the sharpest decline since the financial crisis), according to Halifax’s last house price survey.

London prices have been falling on a quarterly and annual basis since the third quarter of 2017.

However, it’s worth remembering this comes after years of steep price growth for the capital’s homes and the fall has been led mostly by the fall in value of high-value properties.

In the home counties outside of London, there was a small annual increase of 0.3% for the South East Region, but growth is slow and well below the national average.

Price growth remains robust for rest of country

Despite the slumping prices in London and the South-East, prices grew strongly elsewhere in the country, according to Halifax’s data.

The East Midlands and East Anglia saw house prices rise 7.3% and 7.2% respectively, with Scotland seeing a 6.7% rise, followed by Yorkshire and the Humber with a 6.1% house price inflation.

As a national average, house prices are up 2.7% and the average UK house sits at a value of £227,871.

Buyer demand falls for 12 months in a row

Buyer demand for homes has been falling for 12 consecutive months, according to the latest Royal Institution of Chartered Surveyors (Rics) survey.

Rics say the number of homes coming up for sale is in short supply and there a declining number of completed transactions.

Simon Rubinsohn, chief economist at Rics, says:

“The latest Rics results provide little encouragement that the drop in housing market activity is likely to be reversed any time soon. It has the potential to impact the wider economy contributing to a softer trend in household spending.

“This could make Bank of England deliberations around a May hike in interest rates, which is pretty much odds-on at the moment, a little more finely balanced than would otherwise be the case.”

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Mortgages at their most affordable level in a decade

Halifax also claim mortgages are the most affordable they’ve been in more than ten years, with average mortgage payments accounting for less than a third of homeowners’ disposable income, compared to almost half in 2007.

Their report states “the significant improvement in affordability since 2007 has been driven predominantly by historically low mortgage rates, despite the first base rate rise in a decade last November.”

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