Halifax records November house price drop of 1.1%

| December 5, 2007 | 0 Comments

Data from Halifax, the UK’s largest mortgage lender, shows a 1.1% decrease in UK house prices in November, the largest monthly drop since December 2006.

The decrease takes the annual rate of growth down to 6.3%, compared with 8.9% in October, and puts the average cost of a residential property in the UK at £194,895.

This is the first time that Halifax figures have shown a fall in house prices for three consecutive months and the bank’s chief economist Martin Ellis, believes that the increase in interest rates between July 2006 and July 2007 have now taken effect.

At the same time Mr Ellis sees the housing market as having a “very solid foundation” despite the fact that “higher mortgage repayments and falling real earnings have put pressure on households’ incomes, resulting in a slowdown in both house price growth and activity”.

He is not expecting a “sustained and significant” fall in prices because “demand from a large number of potential first-time buyers will support house prices”. In addition, employment levels are at a record high.

The Halifax data is the latest to confirm a slowdown in the property market. Nationwide recently reported a November fall in house prices that was the largest slide for 12 years.

Also, the Bank of England has confirmed that the number of mortgage approvals has fallen to a near three-year low.

Howard Archer, chief economist at Global Insight, the economic forecasting consultancy, is anxious that the Bank of England’s Monetary Policy Committee should pay close attention to the Halifax data when the committee meets this week.

He argues that “The Halifax data provides significant late support to the case for the Bank of England to cut interest rates by 25 basis points to 5.5% on Thursday.”

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