House prices continue to fall

Hilary Osborne 

House prices in the UK fell for the second month running in October, the UK's largest mortgage lender said today, in a further sign the market may be grinding to a halt.

The 0.5% fall reported by the Halifax follows a 0.6% dip in September - the first time prices have dropped in two consecutive months since the early summer of 2005.

The fall has brought annual price inflation down to 8.9%, from a high point of 11.4% in August.

The average price of a home in the UK now stands at £197,248, Halifax said.

This is the first time since February that the annual growth rate recorded by the lender has been in single figures.

Halifax said the rate was expected to fall further over the next few months as the strong monthly price gains seen in the autumn of last year began to drop out of the equation.

Growth over the three months to the end of October stood at 0.3%, Halifax said, continuing a downward trend that started at the end of last year, part way through the last cycle of interest rate rises.

The bank's chief UK economist, Martin Ellis, said the three-month figures were a good guide to the underlying trend and suggested a "steady easy" in price growth.

"The rise in interest rates since August last year and negative real earnings growth so far this year are curbing housing demand, leading to a slowdown in both price growth and activity," said Mr Ellis.

There are signs elsewhere that activity in the market is declining, with the number of mortgages approved for house purchases down 6% in September, and levels of interest from new buyers also down.

However, Mr Ellis said he did not expect to see prices crash.

"The UK economy is in a strong position. Sound market fundamentals, including high levels of employment and a shortage in the number of properties available for sale, will continue to support house prices," he said.
 

http://www.guardian.co.uk/money/2007/nov/08/houseprices.personalfinancenews

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