This is according to the latest Hometrack house price survey which showed the strength of the London market, where prices were up 1%, flattered the national picture.
Over the past 12 months 78% of postcodes across the country registered price falls. This in contrast to London where, over the same period, prices rose across 43% of the capital.
Overall the supply of housing for sale grew by 19% over 2011 – with all the growth coming out of the first half of the year. But with mounting uncertainty over the economic outlook, the number of would-be buyers prepared to sell has fallen. In December the number of homes coming to the market fell by 3.4%.
The proportion of the asking price achieved remained largely unchanged over the year tracking in the range of 92% - 93%. But in the North of the country it has started to move lower – suggesting an above average acceleration in price falls over 2012.
Hometrack believes that low interest rates and housing turnover will continue to act as a support to prices during 2012 but the overall trend will be downwards. It expects house prices to fall by 3% by December 2012.
Commenting on the latest monthly national housing survey, Richard Donnell director of research at Hometrack, said: “The housing market has proved resilient over 2011 despite a steadily deteriorating economic outlook.
“Average prices moved 2.1% lower over the year, following a 1.6% decline in 2010.
“Low interest rates, forbearance by lenders and low turnover have acted as a support to prices over the year. But sales volumes have remained low.
“Over the last 12 months, 78% of postcodes have registered price falls. The most affluent postcodes of London are the only areas of the country that have seen price rises over 2011. Our analysis shows that prices have grown across 43% of the capital over the last 12 months. This is in stark contrast to the rest of the country where the majority of all other regions posted price falls over the same period.
“After a weak end to 2010 there was a distinct bounce-back in demand over the first half of 2011 with new buyers rising by 14%. Yet over the second half of the year demand ebbed away as uncertainty over the economy grew. New buyer registrations (demand) fell by 11% over the second half of the year with December alone registering a fall of 6.3%. This may be largely seasonal but is also reflective of weaker consumer confidence.
“The fortunes of the housing market are directly linked to the wider economy and looking ahead to 2012 the expectation is that growth will remain sluggish, unemployment will continue to rise and household incomes will remain under pressure.
“Low interest rates and housing turnover will continue to act as a support to prices but the overall trend will be downwards and we expect house prices to fall by 3% by December 2012.
“The flipside of a weak sales market will be continued demand for rented housing and further upward pressure on rental values which we expect to rise by 2% over the next 12 months.”
