End of Year Figures from Nationwide
Property prices in Britain declined by 0.1% in December according to the latest price index by the Nationwide. It cites a 1% decrease in property prices for the year as a whole, which negates a 1% rise shown in 2011; this means that by the Nationwide's figures, property prices have effectively remained unchanged over the last two years ago. Not surprisingly, the bank aren't particularly optimistic for the year ahead; house prices are expected to stay at similar levels or to decline slightly throughout 2013.
Nationwide's chief economist, Robert Gardner said: "Given that the UK economy was in recession for much of 2012, a 1% decline in house prices may be seen as a relatively resilient performance. However, the fact that prices declined even though employment rose strongly, suggests that conditions remain fragile, especially since other signs of housing market activity, such as the number of mortgage approvals, remained subdued, well below their long run averages.
Although the average property price in Britain stands at £162,262, the north-south gap in property value has never been so pronounced; a home typically costs £95,000 more in the south, than in the north. London and the south west were the only areas to record house price rises over 2012 - all other regions saw falls.
Despite the general stability in house prices, no one can deny that they continue to be relatively unaffordable. On average, a house costs 5.1 times the average yearly wage and the monthly mortgage payment accounts for 33% of earnings. In a recent poll by the Financial Times, 44 experts said that houses were still over-valued, compared to 26 who said they were not.
Despite this, no one is expecting a significant fall in value in 2013. Mortgage lending levels have seen recent increases thanks to Government incentives to banks who are prepared to lend. This has prompted the Council of Mortgage Lenders (CML) to predict a "more stable and positive" year ahead. The Halifax have predicted a flat year ahead but the estate agent website Rightmove has said that house prices will be pushed up due to a lack of supply.
Sources: thisismoney.co.uk, nationwide.co.uk