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House price rise lowest since 2005
According to a survey from property website Rightmove, annual house price inflation in January in England and Wales fell to its lowest level since 2005, strengthening the view that the housing market is heading for a sharp downturn.
The average asking price for property in England and Wales dropped 0.8 per cent in January, less than the 3.2 per cent slide seen between November and December, yet cutting the annual rate of house price inflation to 3.4 per cent from December’s 4.8 per cent. This is the third consecutive monthly house price fall, despite the fact that the FTSE 250-quoted estate agent flagged up evidence of a rise in activity immediately after the new year, when visits to the Rightmove.com website rose by almost 20 per cent compared with the first two weeks of 2007.
Despite the drop in the average asking price, there have been signs of market improvement in early January. According to Rightmove’s commercial director, Miles Shipside, ‘Some homebuyers are now able to find properties that have fallen into their affordability zone, and are bagging what they see as bargains against previous prices.’ With many properties having seen ten per cent price drops (or more), some of the pent-up demand from previously disenfranchised buyers is now being satisfied.
Nevertheless, other recent sector surveys point to a housing market slowdown. Department of Communities and Local Government data revealed that prices waned by 0.8 per cent in November, versus a slight gain of 0.1 per cent in October. Moreover, similar research from Halifax bank and the Nationwide building society suggested further weakening in the market in December, with mortgage approval levels sinking to a three-year low in November.
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