Belfast Telegraph

Province is hardest hit in UK house price survey

Northern Ireland is continuing to see the biggest year-on-year drop in house prices at 14.1%, new figures have revealed.

For the UK as a whole, prices fell by 1.4% during January as the property market continued to come under pressure from Government spending cuts and the mortgage drought.

The drop left the average cost of a home in the UK just 0.5% higher than it was in January last year at £208,552, according to the Department for Communities and Local Government.

It was the eighth consecutive month during which the annual rate of house price inflation has fallen, and the latest rise was considerably lower than the 3.8% increase that was seen in December.

The three-month-on-three-month change, which is generally seen as a smoother indicator of market trends, also pointed to an acceleration in the rate at which prices are falling.

Property prices dropped by 0.4% during the three months to the end of January, compared with a 0.2% decline in the quarter to the end of October.

House prices are coming under pressure as potential buyers sit on their hands in the face of the looming Government spending cuts and economic uncertainty.

Those who do want to press ahead with a purchase are continuing to struggle to raise the mortgage finance they need.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The housing market will be pressurised over the coming months by high and likely-to-rise unemployment, negative real income growth, the increasing fiscal squeeze, very low consumer confidence, and ongoing difficulties in getting a mortgage, particularly for first-time buyers.

"We suspect that house prices will fall by around 5% in 2011 and end up losing around 10% from the peak levels seen in the first half of 2010."

Annual house price growth is now negative in seven regions of the UK.

Northern Ireland was followed by Yorkshire and Humberside at 4.6%, and Scotland and the West Midlands, which both recorded a 3.2% decline.

Growth was strongest in the east of England and London, with prices 4% and 3.7% higher respectively than they were in January last year.