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The latest Land Registry report on the state of the housing market has been published and the last quarter of 2009 appears to have come as a relief to estate agents and those looking to sell up.
House prices were up in England & Wales according to the Land Registry by 2.5% at £161,783. However there were significant regional differences with prices in London up 6.1% in December over the year but falling by 2.5% in Wales where they were down 2% in December alone.
Even within London though there were mixed stories. Prices in Newham were down 5.7% and they had fallen 14.5% in Barking and Dagenham over the 12 months but they were up 6% in Richmond upon Thames.
Prices are up but volumes are still puny
Of more significance though was the increase in the volume of sales recorded. The Land Registry are always three months behind so they are reporting last Octobers’ volumes but they are up in England and Wales by 34% to 59,700.
This is against a six year average of 85,616. Sales in London were up more with homes between £800k and £1m up 116% on the year before and by a massive 144% for homes between £1m and £2m.
As usual the broad statistics don't tell the whole story. The market may have improved strongly in London and the South East but the picture is different as you move further away with some parts of England and Wales still in real trouble. Sales volumes are climbing and some sellers are finding that they can get a good price due to the lack of choice available for buyers but there is still a long way to go before this good news story in Central London is mirrored elsewhere.
It’s nothing to do with supply and demand
As regular readers will know, I am not a supporter of the argument that house prices are determined by supply and demand. Most Brits aspire to owning their own home and there are tens of thousands of people who would like to move to a bigger house in a better area.
First time buyers are typically in their 30s, couples sadly split up just as often now as they used to, and those wanting second homes continue to price out locals so demand is as strong as it ever was.
Credit's the key
The availability of credit has far more impact on prices and mortgages are still as rare as upstanding MP’s. 2.2m people logged on to one property web site in December alone. A month when only 100,000 homes sold!
In both 2006 and 2007 around 1.6m homes changed hands across the UK.
Last year just 800,000 homes were sold. Actress Sam Taylor-Wood is perhaps an extreme example of the trend in buying new homes for cash. She is believed to have splashed out £11m on a swanky London home and typifies those who are not interested in mortgage rates or how much of a deposit they might require.
If the market is ever to recover and more than just a handful of homes are going to sell then we are going to need banks to pull their fingers out and get lending. If they don’t then 800,000 people every year are going to have to stay where they are or is the rental market is going to explode.
Perhaps it’s time to consider property as an investment once again?
