Sturdy UK House Prices Justify 'Cautious Optimism' - Rightmove
By Shane Croucher | November 19, 2012 11:09 PM EST
House prices have risen by 2 percent across the year in the UK, according to a leading property website, the highest annual increase seen in November since 2007.
London's strident property market continues to overshadow other regions across the country, though house prices as a whole have held up over the past year despite the recession and a worsening outlook for the domestic and world economies.
Without the "London effect" house prices have grown by 0.2 percent in a year, reported Rightmove's monthly house price index.
"Though the market remains patchy and national statistics are given a gloss by a buoyant London market, there are a number of positive trends that justify cautious optimism as the market enters its winter recess," said Miles Shipside, director and housing market analyst at Rightmove.
"Outside the capital, agents report prices are broadly flat in many parts of the country compared to a year ago.
"This stability may indicate a sounder springboard for 2013 as the wait goes on for a sustainable recovery in transaction numbers."
From October to November house prices dropped by 2.6 percent, but Rightmove said that this must be taken in context with November falls in 2010 and 2011 of 3.2 percent and 3.1 percent respectively.
The average asking price in the UK was £236,761 in November.
Other research by London Central Portfolio Limited (LCP), an investment funds manager specialising in real estate in the city's most affluent areas such as Chelsea, suggests stricter stamp duty rules have deterred buyers of high-end property.
Greater London sales of properties worth between £2m and £5m have plunged 53 percent in the third quarter of the year, said LCP.
"Clearly, the tax changes have slammed the brakes on both the domestic and investment market," said Naomi Heaton, LCP's chief executive.
Recent policy efforts by the Bank of England should help stimulate mortgage lending by relieving the squeeze on credit.
Househunters have been deterred by cautious banks demanding as much as 25 percent of a property's value to be laid down as a deposit before they will give out a home loan, putting the prospect of a mortgage out of the reach of most.
They have also diminished the size of home loans available, with some lenders only offering three times the value of a borrower's salary, compared to five times prior to the 2008 financial crisis.
Two credit easing schemes from the central bank see financial institutions offered cheap loans in tandem with the amount of money they lend to the real economy, including in the form of residential mortgages.
Early indications show that some of the major banks have already brought down their mortgage rates and deposit requirements because of the Bank of England's schemes.
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