House Prices Down Again
The fall in house prices continues, with another 2% off in June. Forecasts are now for house prices to continue falling until 2010 as there seems to be no let-up in downward pressure on property prices.
The latest Halifax house price survey says that house prices fell by 2% in June – that’s a fall of £3,600 for the average house.
The figures from the UK’s largest mortgage lender suggest that house prices are falling at their fastest rate since the crash of 1990s.
The actual figures were a fall of £3,640 from the average price in May of £183,984. This means that average house prices are now back down to the level of August 2006, and 10% lower than they were at the peak in August 2007 of £199,600. The annual drop in house prices now stands at 6.1% - the biggest since March 1993.
Despite the apparent bad news the longer term picture looks better. House prices are 2% higher than two years ago, 10% higher than three years ago and 40% higher than five years ago.
The mortgage market has had a tough period with the tightening of credit between financial institutions. Borrowers have been squeezed out, so fewer have been asking for mortgages. Bank of England figures have shown a slump in mortgage approvals in recent months. The lowest number ever recorded – 42,000 – was in May, and probably indicates hard times for house prices will continue.
Halifax’s view of property prices is gloomier than Nationwide’s which said that values were down by only 0.9%. Nevertheless, Nationwide annual fall is slightly higher than Halifax’s, at 6.3%. The forecast from Halifax for the whole of 2008 is for a house price drop of 9%. Other experts say the fall may be as high as 15% in 2008 with another fall of 12% in 2009.
It seems there may be some way to go yet before prices bottom-out. Many industry watchers are now saying that it might be 2010 before the market picks up again. Downward pressure on house prices continues with low activity, tight lending criteria and stretched buyer affordability.
