House Price Rises: House Price Inflation

The December 2009 Housing Market Survey by RICS found that there was a reduction in the gap between supply and demand for houses coming onto the market, with 30 percent more Chartered Surveyors reporting a rise rather than a fall in house prices: down from 35 percent in November.

Commenting on the findings, RICS spokesperson Jeremy Leaf argued that new house enquiries are continuing to outpace new house instructions, which is helping to push house prices higher.

“The recent loss of momentum in prices and the moderation in new buyer interest can be in part attributed to the housing market pulling down its shutters for Christmas,” he said.

“It is likely that the New Year will see more interest and activity in the market as those who held back start to market their property with renewed optimism.”

House Prices: Regional Variations

The RICS findings show that a significant majority of surveyors are still recording price increases in London, the South East, the South West and East Anglia.

However, more surveyors in the North and the West Midlands are seeing falls in house prices indicating that the recovery in the market is less entrenched in some parts of the country than others.

Transaction levels were little changed in December. The number of sales per surveying firm is still hovering around 19 for the fourth consecutive month while the closely watched sales to stock ratio - a measure of market slack and a lead indicator of future prices- fell back slightly.

Findings released in the first week of January 2010 as part of the Halifax House Price Index reveal that house prices rose by 1.0% between November and December, 2009, bringing the cost of an average house to £169,042. House prices have risen by 9.4% since reaching their lowest point in April 2009.

Separate research released by Halifax showed that the proportion of disposable earnings devoted to mortgage payments by new first-time buyers based on national average earnings has almost halved from a peak of 50% in June 2007 to 27% in November 2009, meaning that at current house price rates many first-time buyers will be able to afford to buy a property.

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