Page last updated at 11:29 GMT, Monday, 28 July 2008 12:29 UK

House prices 'dropped 1% in June'

Houses for sale in Macclesfield
Various predictions have been made about house prices

House prices in England and Wales fell by 1% in June from May, according to figures from the Land Registry.

That drop meant that the annual rate of increase was 0.1%, the tenth consecutive month that the annual rate of growth has slowed.

The average price of a home in England and Wales slipped to 180,781.

Despite the current slowdown, which has been caused by tougher lending demands, a social housing group predicted that house prices would rise 25% by 2013.

Rising or falling?

According to the National Housing Federation (NHF), average house prices in England were set to rise by 25% over the next five years because demand for housing would outstrip the construction of new homes.

People are living longer, they're delaying getting married and they're more likely to get divorced - meaning that we now have more households than ever
David Orr
National Housing Federation

The NHF said that house prices in England would fall by 4.4% in 2008, and be 2.1% lower in 2009.

However, it predicts that prices will have recovered by 2010 and would rise by more than 9% in 2012 and 2013.

While there are questions about how accurate five-year forecasts can be, there is a general concern that new homes being built will not meet demand.

"As soon as the economic outlook improves, house prices will resume their previous upward trajectory," said the Federation's chief executive David Orr.

Market view

In the meantime, analysts are trying to work out how fast and how far house prices will drop.

Sale signs
The housing market has been affected by the credit crunch

The Land Registry figures are based on prices at the completion of sales and therefore lag behind some of the other surveys which rely on mortgage data.

The figures show that during June the house price fall was particularly marked in London, which saw prices drop by 2.5% from May.

It also found that sales volumes remained much lower across England and Wales than in the same month a year ago.

The North East of England was the only area to see a monthly rise in prices, up 4.1% in June and 3.1% for the year. That made the average house price in the region worth 133,508.

The region with the biggest year-on-year fall was the West Midlands (down 2.3%), with the average cost of a home in the region at 149,375.

The most up-to-date figures from the Registry on the number of homes changing hands show that far fewer people are moving than last year.

The credit crunch has made it more difficult, especially for first-time buyers, to get a good mortgage deal.

The figures show that semi-detached homes in England and Wales fell in price by 0.6% in June 2008 compared with a year earlier.

Detached homes went up in price over the same period by 0.8%.




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