Property prices decline for first time in 2 years

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by Kay Murchie

According to a survey by the property research specialist, Hometrack, property prices declined in the UK for the first time in 2 years this month.

The average cost of a home in England and Wales fell 0.1% to £176,100 from September said Hometrack. Prices in the capital fell 0.5%, the most of any part of the country. However, prices in the West Midlands remained the same.

The figures come after the problems at the crisis-torn bank Northern Rock, increasing concerns for consumer confidence and the property market as the global credit crisis continues to have an impact.

Hometrack also said property prices increased 4.4% from 12 months earlier, down from 5% in September. However, the report follows mixed figures for the market last month. According to HBOS, the Mortgage lender, prices fell last month whereas Nationwide Building Society reported the strongest increase in 3 months.

Richard Donnell, a spokesperson for Hometrack, said the decline in property prices is not unexpected. Prices were bound to be affected after many months of falling levels of demand and weaker buyer confidence.

Mr Donnell added that it is expected that house price growth will slow further over the next few months with further small price falls possible in markets where achievable pricing levels are falling into line with demand.

The Royal Institution of Chartered Surveyors (Rics) said property prices plunged in September at their fastest rate for 2 years. In addition, the world’s leading economic institution, The International Monetary Fund, said that it is likely that the credit crunch will have a huge impact on house prices and could prompt a slump.

Finally, Bank of England housing guru, Kate Barker, said last week increasing property prices have left the UK in danger of a considerable property downturn.