Property prices fall at lower end of market, increases at higher end

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by Kay Murchie

Research from Chesterton estate agents shows that house prices in the most affordable 20% of the UK’s property market fell by 0.1% last month.

However, in comparison the top 20% properties increased by 0.3%. The research, compiled by the Centre for Economics and Business Research (CEBR), also discovered that the capital has been drawn into the wider house price slump.

London has so far been immune to falling property prices over recent months but research from Chesterton discovered 14 of the 32 local authorities in London experienced price falls. On an annual basis, however, London house prices performed better than anywhere else in the country, growing by 11.3%.

The slowest annual price growth was noted in the East Midlands, West Midlands and Wales, where prices grew by just 2.2%.

Douglas McWilliams, CEBR chief executive, said house prices are probably not doing quite as badly as the headlines from some of the mortgage providers imply.

With mortgage advances down 40% on 12 months ago, their mix has changed and their year-on-year comparisons are affected, said Mr McWilliams.

According to Chesterton, annual growth for the UK now stands at 5.6%. The agent argues that the credit squeeze is behind the slowdown.

Richard Davies of Chesterton said as the impact of the credit crunch feeds through to the property market, we are noticing buyers are becoming more cautious.

While price reductions are more common in the bottom end of the market, the top end is certainly not immune. There is a trend of buyers at the upper end of the market who require no or very little finance and therefore are not impacted by the credit squeeze, concluded Mr Davies.