by Mark Johnston
Fears are still growing of a property price crash as house prices continue to fall. Last month figures dropped by an average of £6,000 for a house in the UK.
The figures published by Halifax showed further decline in the UK market as Septembers figures dropped by 3.6% which was the largest fall since the Halifax started to track house price figures back in 1983. Market analysts are now warning that they are expecting to see further falls to come.
The Halifax suggested that the large fall was due to an increased number of properties on the market together with a reduction in the number of people looking to buy. This is largely due to people not wanting to commit themselves in the wake of an uncertain economy but is also due to it becoming increasingly difficult to secure a mortgage.According to the Halifax, the average UK house is worth around £162,096 and this latest fall was wiped around £6,000 from its value. The Halifax declined to make comment on whether this was the start of a market crash as they felt it was way too early to make any call on future movements.
Property crash or not, the figures still sent shockwaves through an already fragile industry. Shares in large developers such as Barratt Developments, Persimmon and Taylor Wimpey fall together with some of the larger lenders such as the Lloyds Banking Group and Royal Bank of Scotland.
The building firm Taylor Wimpey was one of the hardest hit which saw 3% of its value wiped out in a single day. Lloyds also suffered a similar loss with a loss of 2% of its share price as owners of the mortgage giant Halifax.
Howard Archer, chief economist at IHS Global Insight, said the report was an “absolute shocker” and would certainly “undoubtedly raise fears of a housing market crash”.
He did suggest that the market was particularly volatile which may have just been a correction of the unexpected rises that were reported in August and July this year.
Mr Archer said:”Rather than crash, we expect house prices to trend down relatively gradually over the final months of 2010 and in 2011 to lose around 10% in value.”
As with many of these reports, another lender Nationwide, published a different picture of the state of the market. Nationwide announced that their figures were up 0.1% in September after a 0.8% decline in the month before.
Paul Diggle, property expert at Capital Economics, said: “The hefty drop in the Halifax measure of house prices adds weight to the view that house price weakness is far from over. The report adds weight to the argument that we are on the cusp of a more sustained downturn in house prices”.
Some are looking at the fall as a positive and hopes that the fall will give the market the boost that it needs and tempt buyers back into the market looking for cheap deals.
Tim Hammond, chief executive of property search firm The Buying Agents, said: “There will be a lot of buyers out there who will see this as the window of opportunity they have been waiting for. For some time there has been a stand-off between sellers and buyers, with vendors reluctant to drop their prices and properties languishing on the market for months at unrealistic prices. Now at last, it seems we’re starting to see the ‘vendor freeze-up’ thawing as those sellers in a position to discount their properties are making the decision to do so.”
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