House prices in England and Wales continued to fall slightly in April, but they have begun to rise significantly in London.
The figures were produced by the most authoritative index, published by the Land Registry, which reports the actual prices paid for all properties and so is more reliable than statistics produced by mortgage lenders.
Monthly rises, annual falls
There was a marginal drop in the rate of price falls in April – 0.3%, compared to 0.4% in March. However, six of the ten regions in England and Wales showed month-on-month price rises.
London registered the strongest rise – a 1.4% increase in prices in April, which pushed the average price in the Capital to £302,411.
This confirms other recent evidence that the property market has bottomed-out - at least for the moment - with increases being recorded, in particular, in prime Central London.
The East Midlands (1.2%), West Midlands (0.8%), East (0.6%), Wales (0.3%), and South East (0.1%) also recorded price increases in April. The largest monthly reduction in average prices was in the North East, where they came down by 2.6%.
Year-on-year prices have fallen by 16.2%, and the average house price in England and Wales is now £152,898.
The biggest annual fall was recorded in the South West region, where average prices dropped by 18%.
End to 20 month fall
More recent figures – covering May – produced by Hometrack also show improvement. For the first time in 20 months the survey did not report a monthly fall. There was also a 9.4% rise in agreed sales in May, with a 43% jump over the last three months.
However, Richard Donnell, director of research at Hometrack, remains cautious: "While house prices remain unchanged over May, the outlook for the housing market remains fragile with a number of factors that could well derail the recent pick-up in market activity. Given the weak outlook for the economy, house prices are expected to remain under downward pressure for the foreseeable future."
Donnell believes that price stabilisation reflects aggressive repricing of housing stock by estate agents and successful efforts by them to persuade clients to be more realistic in their expectations.
It would be premature to suggest the market has recovered, he says, while activity levels remains so far below normal.
London market strongest
The Hometrack survey – which is based on responses from estate agents – echoes the Land Registry in showing that market conditions are strongest in London.
There was a 15.9% rise in the monthly figure for the number of sales agreed. Prices in London were shown as stable, this improvement in part being driven by a reported decline in the number of properties coming onto the market in the capital.
Agents in central London confirm this trend and note that a lack of supply has created significant competition for the best properties. Peter Rollings, managing director of Marsh & Parsons estate agents, says
"There's a severe shortage of stock on the market and with prices down by up to 30%, the value in the London market is encouraging buyers with large deposits, cash buyers and foreign investors, to invest in London property."
Weak pound boosts London
Knight Frank also reported a strengthening of market conditions, especially for prime London properties. Their latest Prime Central London Index shows positive growth in May in the one million pound plus range for the second month running.
Prices rose by an impressive 1.6% in May, though prices are still over 20% below those of a year before.
Price growth has been strongest in the sub-£1m market, says Knight Frank, and weakest in the over £10m bracket. The strongest performing locations are Mayfair and Marylebone, where prices have risen by 2.9% and 2.7%.
Liam Bailey, head of residential research at Knight Frank, says: "There has been a steadily improving picture in the central London market in recent months with buyers growing in number and deals beginning to shift upwards.
"There is no question that purely in terms of sales activity, the central London market is unrecognisable from where it was six months ago.
"The falls in capital values, cheap debt, overseas investors with US dollars and euros have encouraged buyers back into the market, with many just keen to get on with their lives having put all financial decisions on hold for the duration of 2009."
Bailey adds that in many of its central London offices sales volumes were up significantly and that May was one of the busiest in the last 18 months, with most sales in the £1m to £3m range.
"We have even seen some bankers back in the market after a noticeable absence," he adds. "Russians are also putting money into the market at the top end."
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There's a severe shortage of stock on the market and with prices down by up to 30%, the value in the London market is encouraging buyers with large deposits, cash buyers and foreign investors, to invest in London property.
