House prices fall for third consecutive month

 

December 27, 2007

According to recent figures released by the Halifax, house prices in the UK have taken a tumble for the third month in a row – the first time that this has happened since 1995 based on Halifax figures.

The latest fall is the largest since December 2006 according to Halifax officials, with November figures reflecting a 1.1% drop in property values in the UK. This has taken the annual rate of growth from 8.9% in October to 6.3% for November, with the average property value in the UK now standing at £194, 895.

Halifax officials also stated that the housing market as a whole, including sales and mortgage lending, were going through a slow period, largely affected by the series of interest rate rises that took effect between August 2006 and July 2007, which left many homeowners struggling to make repayments on their mortgages and many potential purchasers struggling to get a mortgage with affordable repayments.

Halifax chief economist Martin Ellis, stated: “Higher mortgage repayments and falling real earnings have put pressure on households’ income, resulting in a slowdown in both house price growth and activity.”

However, he also stated that the housing market still had a ’solid foundation’ adding: “Strong market fundamentals, a structural housing supply shortage and pent-up demand from a large number of potential first-time buyers will support house prices, preventing a sustained and significant fall.”

Prior to the Monetary Policy Committee meeting on December 6th, Howard Archer, chief economist at Global Insight, stated: “The third successive, and deeper, fall in the Halifax house price index in November raises concern that the housing market is headed for a sharp correction - particularly as it follows very weak Bank of England mortgage approvals data for October. The Halifax data provides significant late support to the case for the Bank of England to cut interest rates by 25 basis points to 5.5% on Thursday.”

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