October sees further house price falls

Recently released figures from the Halifax have shown that house prices have fallen again in October, this time by 2.2 percent. This follows a smaller drop in September, and according to Halifax figures has resulted in the annual house price falling to 13.7 percent, although according to Nationwide the annual drop is larger at 14.7 percent. Halifax officials have said that the average house price is now around £30,000 lower than a year ago, coming in at £168,176.

The housing market has been described as still ‘challenging’ by officials from the Halifax, and this is due to a combination of tighter credit conditions in the mortgage market and problems with the slump in the economy. Many industry officials have said that they expect the fall in house prices to continue into next year, and even into 2010, which could send many homeowners into negative equity.

However, an official from the Halifax also said that the fall in house prices was making property more affordable, and added that there were signs that the housing market was going to stabilise.

He said: “The house price to average earnings ratio has fallen below 5.0 for the first time for four and a half years. We expect a further improvement in the ratio over the coming months. The number of mortgages approved to finance house purchase was broadly unchanged in September for a third successive month.”

The Royal Institute of Chartered Surveyors also commented on the situation, with one official stating: “Prices are now falling at a faster pace than in the recession of the early 90s and, with mortgage finance still in short supply, the likelihood is that the picture will continue to deteriorate in the near term. Interest rate cuts by the Bank of England should gradually provide some support but the key issue is the extent to which these reductions are passed on to High Street lending rates. “