UK house prices are now lower than they were three months ago and the weakness shows signs of spreading to London which has appeared resilient up until now, according to the latest FT House Price Index.
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Chris Giles on the latest FT survey
On a monthly basis, house prices in England and Wales rose by 0.1 per cent, according to Acadametrics, the research firm which compiles the index. But previously reported rises in November and December have been revised downward, leaving the average house price at £229,625 against £230,284 in October.
On an annualised basis, house price inflation stood at 6.5 per cent at the end of January, down from 7.4 per cent in December and from 10.5 per cent in August.
“House prices in England and Wales increased by just 0.1 per cent in January, which makes three consecutive months of monthly growth either just above or just below zero - the lowest for over three years,” said Peter Williams, chairman of Acadametrics. “Given the significance of London in terms of impact on the market as a whole and especially in the South, the weakening in the capital’s housing market is notable albeit from a very high base.”
London house prices shrank by an average of 0.1 per cent after a flat November. On an annualised basis, London homes rose by 14.5 per cent, still a strong showing.
Mr Williams described the outlook for 2008 as “challenging”, but noted that any reduction in prices must be seen in the context of very strong house price performance in recent years. “It would take a far more significant shift in prices than we have seen so far to raise the spectre of negative equity,” he said.
The overall data for London house prices mask huge differences between the performance in various boroughs. For example, in Kensington and Chelsea, house prices have appreciated in value by 29.6 per cent over the last three months while the City of Westminster and borough of Hammersmith and Fulham recorded annualised growth rates of 25.7 and 22.4 per cent.
But Bexley house prices grew only by 7.6 per cent while Hillingdon and Havering did only slightly better, showing annualised rises of 8.5 and 8.6 per cent.
Of the 33 London boroughs, 7 have averaged annual growth rates of 20 per cent or more while six have recorded rates of 10 per cent or less.
Regionally, house price performance also shows a wide degree of divergence. Eight of the regions, including London, now show negative growth in the previous month with East Anglia showing values declining by 0.8 per cent.
