House prices fall 12% in a year but many are still out of reach for first-time buyers
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Your support makes all the difference.Property prices are plummeting by almost 2 per cent a month, but home ownership remains out of reach for many first-time buyers trapped by the credit crunch, government figures indicate.
The average house price dropped by more than 12 per cent in the year to Nov-ember 2008, to £161,883, according to the Land Registry. Every region in England and Wales experienced an annual decrease in their average property values, and all regions also sustained a monthly decrease except Wales, which remained stable. The South-east saw the most significant monthly fall in prices, at minus 3.2 per cent. Meanwhile, the number of purchases has also dropped dramatically, with the Land Registry reporting a 61 per cent drop in the number of completed house sales in the year to September 2008.
The dramatic drop in values means that the national house price to earnings ratio has improved significantly in the last 18 months, Halifax has found, with the typical house price now 4.56 times the average salary, the most affordable rate in more than five years, and down from a peak of 5.84 in July 2007. The proportion of local authorities where housing is affordable for a first-time buyer has more than trebled in 2008, according to the bank.
Affordability has improved in seven of the 12 UK regions in 2008, with the biggest improvements in affordability in Scotland, Yorkshire and the Humber. Martin Ellis, chief economist at Halifax, said: "There has been a marked improvement in housing affordability in many parts of the UK. First-time buyers, in particular, are benefiting, especially outside the south of England and the Midlands. We expect this trend to continue in 2009."
But in London, the South-west, the West Midlands, Wales and Northern Ireland, the average property bought by a first-time buyer remains unaffordable for someone on average earnings, the findings revealed, and new homeowners continue to struggle with demands for substantial deposits from mortgage lenders.
David Bexon, managing director of the property search website SmartNewHomes.com, said: "While it is welcome news that there has been an increase in the number of local authorities across the UK where property is more affordable for first-time buyers, it still leaves 86 per cent of local authorities unaffordable.
"For those first-time buyers lucky enough to have the almost universally required 25 per cent deposit, they may be able to secure a reasonable mortgage rate. However, the majority of lenders are still penalising those at the bottom of the ladder by refusing to offer competitive rates and increase lending. Part of the deal of the government bailout was to see those banks benefiting from the £50bn to return to 2007 lending levels, but this has yet to happen."
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