UK house prices fell 1% in 2012

Nationwide figures reveal the great north south divide

House prices fell by 0.1% in December and ended 2012 down by 1%, according to figures from Nationwide building society.

The lender’s monthly snapshot of the housing market showed the annual rate of movement remained in negative territory for the 10th month in succession, and the 1% drop over the year reversed the 1% rise seen in 2011.

The average price of a home in the UK in December was £162,262, based on Nationwide’s data for mortgages that have been valued and approved.

Its chief economist, Robert Gardner, said that given the UK was in recession for much of 2012, the figures could suggest the housing market had put in a “relatively resilient performance”.

However, he said that conditions remained fragile, with potential buyers still deterred by problems in the wider economy and affordability issues. House prices are still around 5.1 times earnings, against a long-term average of 4.2 times.

“The outlook remains uncertain,” he said. “Continued low interest rates and policy measures such as the Funding for Lending Scheme should provide some support.

“But, with the economic recovery expected to remain fairly weak, the 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.”

The society’s quarterly regional data underscored the variations around the UK. While house prices in Northern Ireland fell by 8.2% over the year, ending 2012 more than 50% below their 2007 levels, in England they recorded a drop of just 0.4%. Wales saw a 2.7% fall, while in Scotland it was 3.3%.

Within England, the north/south divide widened to the highest level yet, with the price of a typical home in the south now around £95,000 more than in the north.

According to the society, the average price of a home across the north of England, Yorkshire & Humberside, the north-west, East Midlands and West Midlands was £133,778, versus an average of £228,257 across East Anglia, the south-east, London and the south-west.

The London market was a key factor in the rise in prices across England, up 0.7% between the final quarter of 2011 and the corresponding period in 2012, the largest regional increase recorded by the lender. In Southwark, prices rose by 11% year-on-year.

The cities with the biggest increases were Cambridge, up by 6% at £336,667 and Coventry, up 3% at £165,100, while the biggest fallers were Bradford and Manchester, both down by 9% to £145,478 and £171,830 respectively.

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