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Last Updated: Monday, 8 August 2005, 10:16 GMT 11:16 UK
Subdued market hits house prices
For sale and sold signs stacked away
Estate agents are having a tough time as the housing market slows
House prices are advancing at their weakest rate in almost a decade, figures from the Land Registry show.

Prices in England and Wales for the three months to June were just 5.4% higher than at the same time last year - standing at an average of 184,924.

That compares with an annual increase of 17% seen at the same time in 2004.

Separately, the Office of the Deputy Prime Minister (ODPM) said annual house price inflation was 5% in June, down from 6% in May.

The ODPM added that annual house price growth was weakest in London and the south east.

But there were signs that the market in London could be recovering.

House prices in the capital rose 1.8% in the year to June, slightly up on the 1.6% figure for May.

All other parts of the UK saw annual house price growth fall back, the ODPM added.

Market slowdown

The Land Registry also revealed that the volume of property sales continued to fall - slipping 27.7% - but this was smaller than the 34.8% drop seen in the first three months of the year.

The last time price growth in the UK was so weak was between July and September 1996 when prices rose 5.2% - to an average of 73,559.

Land Registry figures are generally not as up to date as those of banks and building societies, because they record completions and not mortgage approvals.

With interest rates having fallen to 4.5%, RICS expects a modest improvement in the second half of the year as consumer confidence improves
Royal Institute of Chartered Surveyors

However, the figures are viewed as the most accurate measure of house prices, because they include all property transactions.

The Royal Institution of Chartered Surveyors (RICS) said the fall in house price inflation was "not surprising" and was in line with many other reports pointing to a slowdown in the market.

While figures from the Halifax showed prices had risen to 0.2% in July from 0.1% a month earlier, annual price inflation actually fell during the three months to July.

The UK's largest mortgage lender said price growth slowed to 2.3% - its worst performance since April 1996.

Experts predict the Bank of England's decision to cut rates by 0.25 percentage points to 4.5% last week should breathe new life into the stagnating sector.

Halifax said the move would "reduce mortgage payments as a proportion of gross income for the average new borrower from 20% to 19%, the average for the past 20 years and well below the 34% peak in 1990".

'No boom'

Meanwhile, RICS said: "With interest rates having fallen to 4.5%, (we) expect a modest improvement in the second half of the year as consumer confidence improves."

The group added that its own figures for June showed new purchase inquiries had risen to their strongest levels in 18 months as fears of further rate rises faded.

However, while it expects a modest upturn in activity in the sector it warned "a cooling economic climate" would prevent a renewed boom in the property market.

On a regional basis, the Land Registry data showed house price growth was strongest in Wales at 10.3% - pushing the average price up to 138,329.

The south west of England was weakest, chalking up price growth of 4.3% - taking average prices to 195,496.

Meanwhile, big money buyers were also feeling the pinch between April and June.

The registry revealed the number of completed transactions for properties worth more than 1m slipped to 718, compared with 977 in the same period last year.

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