House Price Update to 24 August 2011

UK House Prices Situation: Sales remain low despite price stability

UK House Prices Forecast: Further falls seem inevitable, except in London

Prices Hover as Transactions Fall

House prices only fell by an average of 0.1% in July, but transaction volumes were down by 5.6%, according to the latest LSL Acadametrics House Price Index.

The index showed that average house prices were down 2.6% on a year ago, but the fall in transaction volumes is in many ways more serious, as it indicates that even record low mortgage rates are failing to stimulate market activity.

David Brown, Commercial Director of LSL Property Services, comments that the figures indicate that "the market is not falling off a cliff in the short-term, but that it remains weak in the longer term."

London continues to buck the trend; LSL Acadametrics reports that London is the only region of the UK to have seen consistent price growth over the last four years.

However, the report highlights the impact of inflation – despite London house prices rising by an average of 5.6% over the last four years, they have fallen by 7.5% in real terms. Similarly, average house prices in the rest of the UK have fallen by just over 17% in real terms, due to the devaluing impact of inflation.

Sellers Reduce Asking Prices in Hunt for Buyers

Almost 40% of homes on the market today have had their asking price reduced at least once, according to property website Zoopla.co.uk. The average reduction is 7.1% - or £18,500 off the average UK property price.

One year ago, the average discount was 6.1%, highlighting the ongoing weakness in house prices outside London. The north-south divide is affecting sellers too; house prices in the north are being discounted more heavily than those in the south.

Read about UK House Price indexes / key statistics that track the ups and downs of house prices

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

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