Doomsayers' delight: House price fall hits 2.5% Land Registry figures show the market is fragile but buy-to-let landlords are seeing healthy returns

Published 28th Jul 2011

Another day, another set of house price figures. According to the Land Registry, prices across England and Wales tracked sideways in June, reaching an average of £161,479 compared with £161,823 in May, taking the annual fall in prices to 2.5%.

London was the only region in England and Wales to experience an increase in prices over the last year (up 0.8%), but annual growth in the capital has now slowed to its narrowest since October 2009.

Wales experienced the largest monthly growth, with average prices there rising by 2.8%, followed by south-east England (1.3%) and the West Midlands (1.1%). North-east England experienced the greatest annual (-7.1%) and monthly (-2.1%) price falls.

From January to April 2011, the number of housing transactions averaged 42,733 per month, down from the same period last year, when sales averaged 45,509. Sales volumes have been relatively consistent over the past six months.

While most house price figures are merely white noise, offering little beyond a single snapshot of the market and failing to indicate a trend, at least the Land Registry figures are one of the more reliable barometers – they are based on actual registered property sales rather than approvals or even asking prices.

Nicholas Ayre, director of UK buying agents Home Fusion, said there was plenty in the Land Registry's figures for "doomsayers to get their teeth stuck into" but warned against making rash judgments based on one single set of statistics. He said: "The data can be fickle. Just as your car's fuel gauge becomes unreliable when the engine's running on empty, so these figures have less value when the number of sales is so low.

"Outside London, demand has fallen off a cliff, and unsurprisingly, so have prices. At the top end of the London market, supply is limited and demand is booming and this is steadily driving prices up. Less fashionable areas appear more of a buyers' market, with a big gap opening between asking and sale prices. And because there is more supply and fewer buyers, those looking to buy can afford to be pickier.

"For the country as a whole, the market is still desperately fragile. With lenders still reluctant to offer mortgages, and many who bought in the boom trapped in their current homes by negative equity, there's little chance it will perk up any time soon."

Some industry insiders are claiming the Land Registry figures are further evidence of a boom in buy-to-let, bolstered by statistics from Moneyfacts showing the number of buy-to-let mortgages available has hit 505 – the highest level since September 2008.

David Whittaker, managing director of Mortgages for Business, said the Land Registry figures "prove now is a golden period for landlords". He said: "Property prices are stagnating but mortgage availability remains tight for owner-occupiers and demand for rental property is causing rents to soar. The yields available to landlords on buy-to-let property are very healthy indeed and offer much better rates of return compared with other investment or savings vehicles.

"We expect prices to remain flat for the rest of the year so landlords will be able to bolster their portfolios further over the next five months, taking advantage of the rental market and providing a safety net for those having to rely on the private rental sector for accommodation."

Source: ' Guardian '

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