House Prices Continue to Fall

by Mark Johnston

There are more worries for the struggling UK housing market as a new report published by leading mortgage provider the Halifax has highlighted further drops in the house prices.

The report shows that the cost of an average house in the UK has dropped from £169,500 at the start of this year to around £164,700 today. The figures are based on the Halifax house price index.

The Halifax who published the report has a wealth of knowledge when it comes to house prices. It produces the Halifax House Price Index which they produce by using data they collect from being one of the UK’s biggest mortgage lenders. The House Price Index includes data on the average house price, regional average house prices, month on month differences, quarterly changes and comparisons with the same month the previous year. The data is taken from a sample of its mortgage transactions which usually covers around 15,000 house purchases each month which works out about 25% of all mortgages.

The Halifax has seen falls over the last 3 months although they seems to be slowing. The biggest fall was 3.7% back in September followed by 1.8% in October and more recently just 0.1% in November. The falls have been attributed to an increase in homes going up for sales together with a reduction in the number for buyers looking for new property.

Nicholas Leeming, a director at a leading property website said: “Even though lenders slackened their grip on credit in November, it wasn’t enough to change the market’s direction – the mortgage deep freeze is cooling house prices too. It’s not a question of weak sentiment, but lack of loans. If the lenders aren’t freer with finance, prices could stumble again in the new year.”

The managing direct of Marsh & Parsons estate agents commented by saying: “Until lenders address the issue of mortgage finance, which is choking off buyer demand in many regions of the UK, we won’t see a sustained increase in prices outside of London.”

The gains earlier in the year are more than likely just flattening themselves out so in real terms their have been very little movement. Reports seem to suggest that house prices are dropping but looking longer terms it just looks more like a stagnant market.

Paul Diggle, a property economist at Capital Economics, said: “If unemployment starts to rise again next year as we expect, the pool of unwilling sellers will increase. And with the labour market worsening and mortgage lending set to remain very weak, next year is also likely to see further offsetting falls in buyer demand. That should prevent a recurrence of the tight market conditions that drove prices up in 2009 and early 2010.

“Of course, low interest rates remain a support. But while that makes predicting the speed and depth of price falls difficult, we think at the very least that prices will drop back to their early 2009 lows and, in all probability, considerably further.”



Story link - House Prices Continue to Fall

Related stories to : House Prices Continue to Fall