Six months after the start of the credit crunch the property market is still stalling.
House price growth in England and Wales is still slowing, according to latest Land Registry figures. Despite this, prices rose by 0.9% in January, taking the average property price to £186,045.
House price increases in London were almost twice that of the whole country, with the average sale price rising by 13.1% to £357,976. However, the annual rate of increase continued to stall, reducing from 6.7% in December 2007 to 6.4% in January 2008.
These figures only confirm that the housing market has undergone a sharp slowdown since last summer.
"The downward trend in annual growth rates nationally is also visible in the data for London, although London growth rates continue to be stronger than those of England and Wales," said the Land Registry.
Furthermore, the volume of sales has dropped steeply in the past year, down 22% in England and Wales between November 2006 and November 2007.
Similarly, the demand for mortgages has also dropped under the impact of previous interest rate rises, judging by recent figures from the British Bankers' Association and the Bank of England.
Over the past few months lenders have become increasingly fussy about who they lend to as a result of the crisis of the banking industry. This has caused a major shortage in funds for building societies and banks to allow them to distribute mortgages. Consequently loans that are higher than the value of a home are now almost impossible to come by.
Kate Barker, a member of the Bank of England's Monetary Policy Committee, warned "a drop in lending might contribute to a downward spiral of house prices, which could in turn become a big short-term threat to the UK economy."
The lack of cheap properties on the market means that fewer houses are being sold, with London being 6% down on last year alone and Wales at an all time low.
