House prices fell for the second consecutive month in March, according to official figures released today.
The Land Registry figures, which show that the average cost of a home in England and Wales dropped by 0.4 per cent in March to stand at £184,798, will add to growing fears that the UK is about to suffer a significant slump in the housing market.
Six regions of England and Wales saw price falls during March, with Wales seeing the steepest drop of 2.2 per cent, followed by the East Midlands at 2.1 per cent and the South East at 1.6 per cent. Homes in Wales now cost an average of 1.3 per cent less than they did 12 months earlier, while the value of property in the East Midlands is now 0.7 per cent lower.
At the other end of the scale, prices jumped by 2.4 per cent in the North East in March, with gains of 0.8 per cent in the North West, and 0.6 per cent in London. The Land Registry also revealed that housing market transactions averaged 81,926 a month between October 2007 and January 2008, which was down 25.5 per cent year-on-year. Sales volumes were also weakening more markedly at the end of this period, as they were down 39.2 per cent year-on-year in January at 53,221.
Howard Archer, chief UK economist at Global Insight said: "We now expect house prices to fall by 7 per cent in 2008 and 9 per cent in 2009. Furthermore, the longer the credit crunch goes on and the deeper and longer the UK economic slowdown is, the greater the danger will be that an even sharper housing market correction will occur.
"Current rapidly deteriorating sentiment over the housing market also heightens the risk that house prices could fall more sharply over the next couple of years. Consequently, it is very possible that a drop of more than 20 per cent in house prices could occur over the next couple of years.
The official figures came as a leading estate agent suggested that house prices could fall by as much as 25 per cent if the credit crunch persists, with the market declining by 10 per cent this year and by a further 15 percentage points in 2009.
The pain will be felt in all but the most exclusive postcodes, according to Savills, the estate agent.
However, action by lenders could limit the credit crunch impact to a slide of 6 per cent.
Savills’ revised forecasts coincide with figures from Hometrack, the property data business, showing that house prices have dropped a further 0.6 per cent in the past month, the seventh consecutive fall.
Estate agents polled by Hometrack said that prices are 0.9 per cent lower than a year ago.
