House Prices Predicted To Edge Down In 2013

House prices across the country will fall by 1% during 2013 as the London market shows signs of cooling, property analysts have said.

Prices fell 0.1% month-on-month in December, marking the sixth month in a row that this has happened, and average prices ended the year 0.3% lower than a year ago, Hometrack said.

It predicts that a reluctance by struggling families to take on more debt will continue to act as a drag on the housing market next year and prices will be more volatile with continued low sales.

Hometrack's monthly figures for December show prices were flat in London and East Anglia, fell 0.1% in the Midlands, the South and Yorkshire and Humberside, dropped 0.2% in the North West and Wales and by 0.3% in the North East.

One in five postcodes in England and Wales recorded price increases over the past year but prices have fallen across two-thirds of the country.

London has had strong demand from wealthy overseas buyers and consistently outperforms other regions, seeing prices rise in seven out of 10 postcodes this year. Property prices are now 10% higher than at the peak of the market in 2007.

But price growth in London, vital to keeping average prices up in the rest of the country, is predicted to slow over next year, with a 2% annual increase pencilled in.

Central London price growth looks set to slow, following the introduction of a 7% stamp duty rate placed on homes worth over £2m in March.

The Office for National Statistics recently indicated that house price increases in London could be slowing. The rate of year-on-year price growth in the city dropped from 5.2% in September to 3.4% by October.

The study regularly asks estate agents across England and Wales about achievable selling prices.

But Hometrack's predictions jar with some other recent surveys, including one from Rightmove which said increased competition among mortgage lenders and a continued shortage of homes to choose from will help to push asking prices up by 2% across England and Wales next year.

The Council of Mortgage Lenders has said it expects the housing market to "feel more stable and positive" next year, with much of the boost coming from a multibillion-pound Government scheme which has already helped to increase mortgage availability.

But the council has also said demand for mortgages could be held back by the weakness of the economy and much will hinge on the continued resilience of UK employment.

Halifax has said house prices are likely to be flat next year, with any growth likely to be strongest in London and the South East.