House prices have been falling faster this year in Birmingham and Coventry than in any other urban centres except for Sheffield and Belfast.
Nationwide has reported that over the first six months Birmingham and Coventry house prices were down nine per cent year-on year, with averages dropping to £166,581 and £158,888 respectively. There was a similar fall in Manchester.
Nationwide’s chief economist, Fionnuala Earley, said these numbers did not include newly built buy-to-let flats, which some local estate agents say have become a drag on Birmingham’s property market.
“We would not be showing buy-to-let flats, only the knock-on effect if you sell a similar flat,” she said. “The West Midlands has not been very good.”
Across the West Midlands as a whole house prices have fallen by 3.1 per cent in the last three months to an average of £156,219, 5.1 per cent down on the second quarter of 2007.
That compares a 3.4 per cent drop to £174,514 for the UK, a decline of four per cent since April/June last year.
Taking the month of June on its own, and adjusting for changes in the value of homes sold – which Nationwide does not do with its regional numbers – house prices fell by 0.9 per cent nationally between May and June, driving the 12-month los to 6.3 per cent from 4.4 per cent in May.
“The price of a typical house is now £172,415,” Ms Earley said.
“This is over 13,500 less than it would have cost at the top of the market and over £11,500 less than this time last year.
“However, the strength of house price growth up until last year means that prices are still four per cent higher than two years ago and nine per cent higher than three years ago.”
Ms Earley highlighted last month’s 0.9 per cent loss, coming after a drop of 2.5 per cent in May and one per cent in April as a sign that the pace of the decline is slowing.
Even so, the latest three months taken together are 3.7 per cent down on January/March, against a three-monthly drop of 2.9 per cent in May.
National numbers mask substantial differences between regions and within regions.
In the West Midlands, Worcestershire and Herefordshire house prices are down only two per cent year on year in the latest quarter, for instance.
A five per cent loss in Greater Birmingham contrasts with nine per cent in the City itself.
Over the latest ten years Herefordshire has seen the region’s biggest gain, 165 per cent, which took the average price to £192,730. That carried the average home there to within £330 of top-priced Warwickshire – where the ten-year gain was a more modest 134 per cent.
Ms Earley warned that house prices are unlikely to recover until activity in the housing market – driven by the number of mortgages approved picks up. Even then there is likely to be a time-lag of several months.
She also disputed reports that first-time buyers and buy-to-let investors have been unduly squeezed in the present slowdown.
“Perhaps surprisingly given the poor affordability conditions,” she notes, “first-time buyers’ activity as a proportion of overall house purchase completions has held up fairly well.
“First-time buyers accounted for about one-third of house purchased transactions in the first quarter of the year, exactly in line with the average over the last three years.
Buy-to-let house-buying held up well too, accounting for 19 per cent of the deals completed in the first quarter, well up on the three-year average of 14 per cent.
“However, movers’ activity fell back further,” Ms Earley added.
“Movers accounted for about half of all house purchases in the first quarter, below the 55 per cent average of the last three years.”