London Property Keeps Value

The recently released Halifax house price index has confirmed that valuations are coming down.

According to the index, house prices are now 4.26 times the average UK wage - the lowest ratio since 2002 and a drop of 27 per cent from the peak of 5.84 in July 2007. Mortgage rate cuts are thought to have been a key factor in boosting affordability, although mortgage approvals remain at historically low levels. But potential buyers are being advised to hold off for just a short while longer as the ratio falls further.

Rising unemployment, low consumer confidence and the reduced availability of credit are all expected to exert downward pressure on the housing market over the next few months.As a result, further house price declines are likely. House prices declined by 1.7 per cent in April, slightly less than the 1.9 per cent fall in March.

The UK average price of £154,716 has returned to where it was five years ago in April 2004 (£154,511). The Government's pledge to raise the Stamp Duty threshold from £125,000 to £175,000 has helped more than 45,000 homebuyers since last September.

But its effect has been less substantial in London where only 18 per cent of total sales were below £175,000 between September 2008 and January 2009, compared with 79 per cent in the north.