House prices down 1% during 2012

House prices down 1% during 2012

Activity in the housing market is set to remain subdued this year amid the difficult economy, Nationwide said

Activity in the housing market is set to remain subdued this year amid the difficult economy, Nationwide said

First published in National News © by

House prices fell by 0.1% month-on-month in December and they are likely to remain flat or edge lower still during 2013, Nationwide has said.

The monthly decline meant that at £162,262 on average, prices dropped by 1% over 2012, reversing a 1% increase recorded in 2011.

Nationwide predicted that activity in the housing market is set to remain subdued this year amid the difficult economy, with prices at similar levels or drifting "modestly lower" over 2013.

London recorded the strongest house price increase of all the UK regions, with prices up by 0.7% at the end of 2012 compared with a year earlier. The South West was the only other region to record a slight price increase over the year with a 0.2% rise, and all other areas saw falls, Nationwide's report said.

House prices in England have tended to be more resilient, declining by 0.4% over 2012 to reach £186,390.

However, contrary to some other recent studies, Nationwide said it had found evidence that a North/South divide in the market has widened. It said the price of a home is typically around £95,000 more in the South than in the North, representing a new high and a 2% increase compared with the end of 2011.

Yorkshire and Humberside was the weakest-performing English region for house price growth, with prices edging down by 2.5% over the year. Meanwhile, Wales saw a 2.7% fall in prices to reach £131,630 on average and prices also dipped by 3.3% in Scotland to £131,795.

Prices plummeted by 8.2% in Northern Ireland year-on-year to £104,282, leaving them more than 50% below their 2007 highs. Analysts have put the sharp price falls in Northern Ireland down to the market readjusting following a period of particularly strong increases before the financial crisis struck.

The Government launched a multibillion-pound scheme at the start of August to boost lending, which has already caused mortgage availability to increase. Figures from the Bank of England and the British Bankers' Association have shown a recent pick-up in mortgage approvals to home buyers and the Council of Mortgage Lenders has said it expects the housing market to "feel more stable and positive" in 2013.

But Robert Gardner, Nationwide's chief economist, said: "With the economic recovery expected to remain fairly weak, the housing market is likely to be characterised by low levels of activity again in 2013, with prices remaining flat or modestly lower over the course of the year." Other house price studies have given mixed predictions for 2013, with Hometrack saying it expects prices to edge down by 1% during 2013. Halifax has predicted house prices are likely to be flat in 2013, while Rightmove believes a shortage of homes on the market will help push up asking prices up by around 2% this year.

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