The year in figures

The Midlands is loitering near or at the bottom of most tables for house price growth this year. Savills suggests that, as growth continues to slow, the regions that were the last to benefit from the upturn in the housing market, such as the Midlands, have been the first to be affected by a change in market sentiment. This was echoed by figures from the Nationwide that recorded the weakest annual house-price growth in the Midlands, with prices rising at 4.7 per cent, about half the national average. Four out of Nationwide's five slowest-rising towns and cities were also in the Midlands: Northampton, Nottingham and Coventry rose by 4 per cent, and Birmingham by only 2 per cent.

Halifax figures showed a large difference between the East Midlands and West Midlands, with a healthy 8.2 per cent growth in the East but only a 4.7 per cent rise in the West. There was some good news for the West Midlands: the Halifax reported an increase of 27 per cent in house prices in Stourbridge and Stratford-upon-Avon over the past year. Coalville recorded the biggest rise in the East Midlands, up by 21 per cent over the year.

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Buyers seem to be split between those looking for value-for-money country houses in areas such as Rutland and Melton, and city commuters buying in an area with good transport links.

Helen Bennett, of Humberts, Grantham: “The top-end country market (£500,000 and above) has been doing well. People are realising they can get more for their money in the Midlands, and with good train links both to the northern cities and London a lot of young families are considering a move here.”

Martin Pendered, Martin Pendered & Co, Wellingborough: “Lower-end prices have continued to improve. Wellingborough is cheap but commutable. A three-bedroom semi costs £135,000 and, with trains to St Pancras taking 50 minutes, this is a very popular area for London workers, such as firemen and bus drivers, who have been priced out of the South East.”

...and what's not

City centres in the Midlands have been suffering. There is an oversupply of new-build flats in Birmingham and Nottingham, and owners are having to sell at a loss.

Peter Mills, Humberts, Grantham: “In recent years Nottingham has been taken over by loft-style apartments. That sector is now struggling with surplus supply. There are no new investors as the buy-to-let market is no longer attractive.”

Martin Pendered, Martin Pendered & Co: “The rot set in in July-August and it has got pretty tough. There has been a serious collapse in confidence.”

Forecasts for 2008

The market is expected to remain soft in the Midlands next year, with Nationwide forecasting prices to be flat. Prices will rise slightly in some parts and fall in others, leaving 0 per cent growth overall. Savills' predictions are a little more positive, with a rise of 1.5 per cent in the West Midlands and 2 per cent in the East Midlands. Knight Frank is the most optimistic, calculating growth at 3 per cent across the Midlands. Capital Economics predicts a bad year all round, with national prices falling by 3 per cent and the East Midlands and West Midlands falling by 5.5 per cent and 4 per cent respectively.

Trends to look out for

Helen Bennett, Humberts: “As things get tighter, the Midlands should do well. There are more people buying here who work in London. The commute to King's Cross takes just over an hour, and house prices are a lot more affordable here than in the South East. Couple that with the very good schools here and I think more families will make the move.”

Philip Barnatt, Mundy & Co, Lincoln: “We are hoping that this year's steady market will prevent prices going down next year. The university has a growing intake of students and so investors are still interested in Lincoln.”

Peter Mills, Humberts: “It will be a slow start to the year, but if there is another rate cut in the new year then we will see the market coming back — from first-time buyers upwards.”

Health check

This Grade II listed farmhouse in Honeybourne, Worcestershire, was offered for sale in May for £775,000 through Strutt & Parker. The property went under offer a fortnight ago at a figure above the asking price.

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