House Price Index

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UK housing market insulated from global financial jitters

  % Change in month% Change Past YearAve house price
August HPI-2.1%-0.3%£231,543
July HPI-1.6%0.1%£236,597

Key points

  • August’s sellers drop average asking prices by 2.1% (£5,054), and year-on-year prices edge down for the first time since September 2009 (-0.3%)
  • In the four years since the onset of the financial crisis asking prices have fallen by only 4.1% (£9,930)
  • Impact of renewed financial turmoil likely to be limited because prices are already ‘bumping along the bottom’ with low transaction levels, as:

    - supply of new sellers remains muted at 30% below 2007 levels, as the number of motivated sellers is broadly matched by the number of serious buyers;

    - base rates now expected to be unchanged until at least 2013, limiting forced sales and holding down mortgage rates for deposit-rich buyers.

  • But there are still risks on the downside:

    - increases in unemployment could stretch lender forbearance to breaking point;

    - sovereign debt concerns could hit willingness to lend and freeze credit markets again.

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