Halifax records 16.2% fall in house prices
The Halifax house price index shows the average cost of a UK home sliding a further 2.2% in December.
The annual decline now stands at 16.2% taking the average price of a property down to £159,896, compared with £197,074 at the beginning of 2008.
The analysis is based on three-month figures but a month-on-month comparison shows a fall of 18.9% in the average house price, from December 2007.
Prices are now down to August 2004 levels and the decline of the past 12 months even exceeds that seen between 1989 and 1995, when the average cost of a home tumbled by 13.2%.
December’s decline also illustrates the failure of base rate cuts to stem the collapse of the market.
According to Halifax, homes lost 2.6% in value in November, followed by 2.2% in December, despite aggressive cuts in the base rate during both months.
With lending set to remain tight into 2009, the only light at the end of the tunnel is an improvement in affordability ratios for first-time buyers.
Research from the lender indicates that the average house price to earnings ratio has fallen from a peak of 5.84% in July 2007 to 4.56% in November 2008.
However, tighter lending criteria mean that large deposits are needed to secure a mortgage and this demand is likely to hamper any revival in the market created by those keen to get onto the property ladder.