House price falls worse than last crash

In the 1990s, many people will remember that there was a house price crash that plunged many homeowners into negative equity, and a lot of people will have concerned memories of this time following the past year, when house prices have been tumbling month on month. However, according to officials from the Halifax, its records show that based on a peak to trough bases the current situation has already outstripped the 1990s crash.

House prices have been falling on a monthly basis, and in September the Halifax claims that there was a 1.3 percent fall in house prices. However, this fall was the smallest seen this year, although it contributed to house prices being around 13.3 percent lower than September of last year. Many industry officials feel that house prices are set to continue falling, with some claiming that the falls could go on into 2010.

One official from the Halifax said: ‘The overall price decrease in the three months to September was very similar to that in the previous quarter, indicating that the trend rate of decline may be beginning to stabilise. The ongoing pressures on householders’ income, combined with the reduction in the availability of mortgage finance, however, mean that market conditions will remain challenging.’

One leading economist from Global Insight said that house prices could fall further by 2010, and could reach a 33% drop compared to August of last year.

Conditions in the mortgage and the housing markets remain strained at present, said officials, with one stating: ‘Credit conditions remain extremely tight and this continues to exert upward pressure on many mortgage rates and limit the amount of mortgages available. Meanwhile, affordability ratios are still very stretched despite the double-digit fall in house prices seen so far.’