UK House Prices Situation at 13 4 2007: Growth slowing in most areas

UK House Prices Forecast: Price inflation gradually falling throughout year

More consistent news this week, with both the Bank of England and a leading building society suggesting the market is softening.

£10,000 Just To Move House?

A new study published by Propertyfinder.com shows that the cost of moving house has tripled to nearly £10,000 in the last decade. Stamp duty and estate agents' fees are both based on a percentage of the price of the property being sold, and this has led to massive rise in these costs as house prices have soared.

In 1996, the average cost of stamp duty was £543, and many buyers did not pay it at all. Today, the average stamp duty fee is £5,009, which represents an increase of 825 per cent in 10 years. When combined with estate agents' fees and removal costs, the average cost of moving home in the UK is now £9,486, up from £2,925 in 1996.

Governor Warns Housing Market Is Slowing

The Governor of the Bank of England, Mervyn King, has said that the housing market appears to be beginning to slow, but that he does not expect a major fall in prices. Speaking to the House of Commons Treasury Select Committee, King said that he thought a small fall in house prices would not cause many problems, and that a larger drop, which would have severe consequences, was unlikely.

King's observations were supported by new data released by the British Bankers' Association (BBA), which show that seasonally-adjusted mortgage approvals for February 2007 were significantly lower than in February 2006. This is the third consecutive month in which this has happened.

Nationwide Claims Market Is "Clearly Softening"

Recent increases in interest rates are starting to have an effect on the housing market, according to new data from Nationwide. March saw an average price rise of 0.4 per cent – considerably down from the 1.2 per cent rise seen in March 2006.

Fionnuala Earley, Chief Economist at Nationwide, said that although growth was continuing, "the underlying trend is clearly softening as interest rate rises take effect." Earley went on to say that Nationwide were maintaining their forecast of reduced growth for the year, believing that current momentum "will take a few months to work through" and that supply constraints would continue to bolster prices in some areas.