Liverpool’s housing market is third worst in England and Wales, report Alex Turner and Neil Hodgson

LIVERPOOL has missed out on the nationwide rise in house prices in the last year as it joins a handful of struggling sub-regional economies that are yet to show signs of post-recession growth.

The city has the third-worst performing housing market in England and Wales and is one of only 12 areas where house prices have declined in the last 12 months.

Data from the Land Registry shows Liverpool still has one of the most depressed housing markets in the country with year-on-year prices down 5.1%.

Only Middlesbrough and Blaenau Gwent have endured steeper declines in the last 12 months.

With the exception of the South Wales borough, the areas showing decline all lie between North Tyneside and Stoke-on-Trent. Like Liverpool many suffer from high levels of economic inactivity.

The average price of a Liverpool house crept above £100,000 in May for the first time in 2010 – only the second monthly increase in the last eight months.

But in the last year £5,370 has been wiped off the average price in Liverpool, and £25,100 from its peak in June, 2007.

Detached houses in the city have seen their value plummet by more than £50,000 since May 2008, with the average price this May at £214,955.

Volumes remain depressed for all house types. The most recent data available is for up to March 2010 – because of a lag in the registration of sold properties – and in the first three months of the year, 729 houses were sold in Liverpool.

While this was 108 higher than the same period last year, it remained less than half of the transactions for 2008 and about one-third of the 2007 levels.

The rest of Merseyside has seen rising prices in the last year, ranging from 2.6% growth in Wirral to a 5.2% improvement in Sefton.

Cheshire West and Chester, Halton and Warrington all saw falls in May but the last 12 months have seen hugely different performances in Cheshire.

Halton, which covers Runcorn and Widnes, has seen growth of just 0.4%, which has added less than £500 to the average price.

The average price in Cheshire West and Chester, which stretches to Macclesfield in the east and Malpas in the south, is up 6.5%, while Warrington’s average price has risen 7.8%.

However all of the authorities in Merseyside and West Cheshire are performing below the national average of 8.2% annual growth.

England and Wales saw a slight monthly fall, of 0.2%, which was blamed on economic uncertainty and an increase in sellers coming onto the market.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “The Land Registry data for May and the June Hometrack survey both add further substance to our long-held belief that house prices will struggle to make significant gains over the coming months.

“Housing market activity remains well below long-term norms despite edging up recently. The economic fundamentals of high unemployment, still falling full-time employment and low earnings growth are hardly ideal.

“Also very significantly, more properties are coming on to the market thereby moving the supply/demand balance more in favour of buyers.”

But while Liverpool has seen as one of the most sluggish property markets on a year-on-year basis, estate agents are confident the market will recover – once the lack of funding for mortgages, which is seen as by far the biggest obstacle, is removed.

Phil Lawton is a director of Sutton Kersh which serves the region from four branches covering Allerton and South Liverpool, Liverpool city centre, West Derby and central Liverpool, and Walton and North Liverpool.

He said there is no shortage of demand, even though it depends on external factors such as unemployment and interest rates, but funding remains the issue.

“People are only renting because they can’t get mortgages,” he said. “Lenders want 25% or 30% deposit and are looking for reasons not to lend. It is still quite difficult.”

He believes that within the city there is significant variation in how robust house prices have proven to be.