Liverpool House Prices

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2nd May 2008

Liverpool House Prices

Liverpool challenges the gloomy property trend with an overall climb in home values.

The fresh house price data released by the Halifax for March shows a national average drop of 2.5% in values. The previous time that there was such a change, was back in September 1992, when prices fell by 3% in a month. It might be presumptuous to expect that a property crash in the style of that which was seen in the nineties is inevitable. The figure for February across the UK was a fall of only 0.4%.

The national figure can be looked at in the form of regional values. The North West witnessed a 0.5% drop, likewise the Yorkshire and East Riding region. The Land Registry of England and Wales present a slightly different story with prices in the north-west during October-December 2007 falling by 0.8%. Examine the North West figures for separate property types and it seems that apartments and terraces are more sought after than semi-detached and detached homes, with the former couple showing a marginal increase in their values. The average cost of a home in Merseyside in Q1 of 2008 was £161,003 according to the Nationwide Building Society. The Halifax believe that the average value of a home in the UK is £191,556, but the Nationwide put the figure at £179,363, down 1.7% from the previous quarter. The Land Registry of England and Wales have provided a breakdown of home values for Liverpool. Their average price as of February 2008 comes in at £138,269, which is a 0.5% rise from the previous quarter and a 4.5 % rise across the previous year.

In other regions, the Halifax described a fall of 5% in the West Midlands, which is the biggest downturn in their results, and then Wales with a 4.7% drop. Greater London on the other hand, enjoyed a boost in values of 1.6%.

As house prices fall across Northern parts of the nation and homes are therefore less expensive, this might tempt more potential buyers onto the market, but the credit crunch is forcing lenders to rethink their strategies. They are asking for larger deposits than before. First Direct, an internet-only arm of HSBC, have decided to withhold all mortgage products until they have managed the backlog of applications that are being dealt with. Northern Rock has offered mortgage rates at uncompetitive levels so that they will not receive as many enquiries from new customers. In laymanís terms, the credit crunch prevents the lenders from sourcing the necessary finance on the money markets that they need to fund the mortgages that the public are applying for.

Mortgage rates are now higher among certain lenders and it may only be a matter of time before all lenders follow this lead. Both the Alliance & Leicester and the Nationwide have upped their rates twice within a short space of time, even though the Bank of England has reduced its base rate by 0.25% to 5%. Clearly these lenders are moving to protect their own interests and their customers are not benefiting from this decision.

The Halifaxís house prices prediction for the remainder of 2008 is relatively optimistic. They believe that values will maintain a degree of stability and emphasize that the current trend should be taken into context with the statistics showing that house prices have leapt by 51% since 2003 and an incredible 171% in the last decade.

The Council of Mortgage Lenders have produced statistics that claim successful mortgages applications dropped in February to only 49,200 contrasted with 50,900 in January and 73,000 a year before in February 2007. This is indicative of the lendersí increasing instability and lack of resources rather than any reluctance on the part of buyers.

The figures will surely increase worries with the economists that the British property market is heading for a major slump. Howard Archer, chief UK economist at analysts Global Insight, believes it is vital not to place all our faith in one piece of data, and it should also be observed that the Halifaxís house values still only fell 1% compared to the previous quarter. Regardless, the general picture is that property prices were under threat due to the great pressure coming from increased constraints on affordability and noticeably stricter lending conditions from even before the latest effects of the credit crunch cam into play, concluded Mr. Archer.