Signs of housing market cool down

Predictions from many economists and analysts that the housing market in the UK is cooling down have been proven following figures relating to house prices for September.

According to figures house prices in September fell for the first time since December, and to many this reflects the start of the cooling down period for the UK housing market. The figures come from the HBOS house price survey. According to the figures there was a 0.6% drop in house prices, which was a far cry from the predicted 0.4% increase.

The average house prices has now fallen to just below the £200,000 mark, taking the annual three month rate of house price inflation to 10.7% compared to the expected 11.1% rise that had been forecast. Halifax officials state that although the economy remains strong it is likely that house price inflation will fall further in the coming months, as the housing market in the UK continues to cool.

Martin Ellis from the Halifax stated: “September’s price fall is consistent with the normal behaviour of the market during a slowdown. A mixed pattern of monthly price rises and falls is a typical feature of a more subdued housing market.”

This could mean good news for first time buyers that are looking to get onto the property ladder, but could result in problems for those that have recently taken out large mortgage, many of whom could find themselves falling into negative equity.

The likelihood of an impact on consumer spending has also increased as a result of the slowdown in the housing market.

One economist stated: “Since house prices gains have stalled, we believe it is highly likely that spending growth will also hit the wall in the months ahead.”

Tom Smith
4th November 2007