UK House Prices Situation: Lowest annual growth rate for 12 years

UK House Prices Forecast: Up to 5% fall expected in 2008

Hometrack Publish March Figures - Falls For 6th Consecutive Month

Hometrack's House Price Survey for March was published this week, revealing that house prices have fallen for the sixth consecutive month, finishing March down 0.2% from February. This leaves the annual growth rate at just 0.4% - the lowest level for some time.

Hometrack's house price index is based on a monthly survey of thousands of estate agents and surveyors across England and Wales, meaning that it isn't dependent on data from completed sales and should reflect the current market state quite accurately.

Hometrack forecast a 17% drop in the number of house sales in 2008 and March's survey noted that market conditions were weakest in the East and West Midlands and Wales, where the proportion of the asking price being achieved was below average and time on market was increasing.

Land Registry February Figures - No Change

The Land Registry also published their monthly house price index this week, showing that there was no change to national average prices in February, although there were some regional variations (annual change in brackets):

• West Midlands: 1.3% (3.4%)
• Yorkshire & Humberside: 0.5% (4.4%)
• East Midlands: 0.1% (2.7%)
• South West: -0.2% (4.1%)
• East: -0.2% (5.8%)
• North West: -0.3% (4.2%)
• North East: -0.3% (1.9%)
• London: -0.4% (10.6%)
• South East: -0.7% (6.0%)
• Wales: -1.1% (2.7%)

The Land Registry's index is based on data from completed sales, so while it includes cash sales it does lag behind other indices, which are based on asking prices and/or agreed prices.

Average Gap Between Asking Prices & Sale Prices Growing

According to the National Association of Estate Agents (NAEA), the average gap between asking prices and sale prices is growing and now stands at 4.5%.

That means that a house with a £180,000 asking price might be expected to sell, on average, for £171,900.

This trend seems likely to get more noticeable if sale volumes fall this year, as buyers become aware that in many cases they are in a much stronger position than sellers.

Read our take on the Credit Crisis the effect on UK House Prices and Mortgages. A Special Report

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