Property Prices Fall For The First Time In 30 Months

Property prices fell in England and Wales for the first time in two and a half years during December, declining by 0.4% at the end of 2007 as the property market continues to weaken.

Data released today by the Land Registry, also revealed while property prices fell on a monthly basis, annual property price inflation also shrank from 8.1% to 6.7% in 2007. The average cost of a house in England and Wales is now £184,469.

The 0.4% decline in property prices in December is the first time property prices have fallen since August 2005, according to the Land Registry. The volume in transactions also fell in 2007 with an average 103,374 homes sold each month from July to October last year, compared with 117,086 per month from July to October 2006.

While overall property prices slumped, some regions have bucked the trend and shown small increases in property prices. The North East saw average property prices rise by 2.2% and the capital saw property prices rise by 0.6% in December.

However, with the credit crunch deepening and the bank of England hesitating to drop interest rates, further property price falls are likely during 2008.

Some analysts are predicting that property prices could fall by as much as 5% during 2008 and potential falls likely in 2009. However the longer term outlook is a little more promising with some analysts predicting that property prices will again begin to rise in the next two to three years.

The reasons given for this is that during this time period, it is hoped that the global credit crunch will have ceased and that interest rates will have fallen and confidence should again begin to return to the property market as well as demand.

However, long term prospects for future property price growth in the UK look reasonably good. Property prices will be driven by an ever increasing population, fuelled by immigration and a lack of housing which means that future property price growth looks like a certainty.