Capital defies gloomy outlook on house prices

Ben Southwood
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HOUSE PRICES sunk back into decline in the final month of 2012, capping off a gloomy year, according to data out yesterday.

Prices edged down 0.1 per cent on average across the country in December, Nationwide said, contributing to an overall decline of one per cent over the year. This yearly fall came despite four individual monthly rises, and projects a picture of an overall flat market.

“UK house prices were little changed in December, declining by just 0.1 per cent ,” said Nationwide chief economist Robert Gardner, “though this was sufficient to keep annual price growth in negative territory for the 10th successive month .”

But Gardner played down the negativity of the data, given the economic difficulties across the world and 2012’s return to technical recession.

However the data showed a market starkly divided between North and South and between London and everywhere else. The difference between average house prices in the South and those in the North rose two per cent to a new high of £95,000.

If not for the pulling power of London, the fall would have been much larger. London prices increased 0.7 per cent over the year, according to Nationwide’s data, and along with the South West, London was the only region to see any house price growth.

Even this upbeat approach to London prices may underestimate the success seen in the capital’s housing market during 2012, as Nationwide’s index only considers houses bought with a mortgage – hence ignoring much of the top end of the market, where cash purchases are common. Other indices that did include cash reported a much bigger price rise over 2012 in London.