House prices continue to decline

08 July 2008

Government figures show the average UK property now sells for £218,151

New government figures released today have shown that the price of the average property decreased by 0.3%, or £724, between April and May.

According to the Communities and Local Government department, UK house prices increased by 3.7% between May 2007 and May 2008. However, in the year to April 2008, house prices increased by 4.9%.

The statistics, which include mortgage completion data, indicated that the average UK property now costs £218,151.

Howard Archer, UK and European economist at Global Insight, said: “The data do little to dilute the serious concerns over the housing market, even though it shows house prices still rising year-on-year.

“Severe downward pressure on house prices continues to come from very weak housing market activity, elevated affordability pressures on potential house buyers, and very tight credit conditions.

“The marked deterioration in sentiment over the housing market also heightens the risk that house prices will fall sharply over the next couple of years.

“On top of this unemployment is now rising, which along with a substantial number of homeowners having to remortgage at a higher rate, is increasing the likelihood that people will have to sell their house for ‘distressed’ reasons,” he added.

Mr Archer added that he expected house prices to decrease by 12% between 2008 and 2009.