House Price Update 28/9/11

UK House Prices Situation: Fragile, yet fairly stable at present

UK House Prices Forecast: Further falls expected before stabilising next year

New Poll Forecasts 4% Fall In House Prices

A new poll of 23 housing economists by Reuters has forecast that house prices will fall a further 4% before stabilising next year.

Those polled expected London house prices to continue to buck the trend and rise slightly next year, thanks to the near-permanent shortage of housing supply in the capital.

There is some evidence that houses may be approaching a 'fair value', however. Those polled rated a median six out of ten on a scale where one is extremely undervalued and ten is extremely overvalued.

Despite this, mortgage approvals continue to run at approximately half the level seen at the peak of the boom, as buyers are deterred by job worries, mortgage deposit requirements and government spending cuts.

House Price Growth Remains Strong Over Last Decade

House prices have grown strongly over the last decade, according to a new report from Halifax – despite the falls that have been seen since the peak of the housing boom in 2007.

The average terraced house has increased in value by £118 per week since 2001 with the average price of a terraced home rising from £89,843 in the second quarter of 2001 to £151,332 in the second quarter of 2011 – that's a 68% increase.

Terraced housing has risen most strongly over the last ten years, but other types of housing have also fared well. Overall, the average price of a British home is 53% higher than it was in 2001, with bungalows (up 68%) and semi-detached properties (up 62%) recording the second and third biggest increases, after terraced houses.

Despite recording the largest increase over the last ten years, terraced housing also remains the most affordable type of home in the UK. Terraced and semi-detached housing represents 63% of all home sales in 2011 – from 59% in 2001.

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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