House prices down another 2.3% in February

| March 5, 2009 | 0 Comments
House prices down another 2.3% in February

The Halifax house price index returned to its usual sombre mood in February, showing a 2.3% fall in the average house price, against a surprise 1.9% monthly rise in January.

According to the lender, the value of the average UK residence fell £3,800 during the month to £160,327, a level last seen in August 2004.

The annual decline stood at 17.7%, based on a three month average.

By comparison, Nationwide’s February index showed an average 1.8% fall in values for the month, giving an annual decline of 17.6%.

Halifax housing economist, Martin Ellis, acknowledges that market activity remains at very low levels but says there are some tentative signs of stabilisation.

Not least, the house price to earnings ratio has fallen to its lowest level for six years.

However the benefits of this are likely to be offset by rising unemployment and a shortage of mortgage finance, according to Mr Ellis.

It therefore seems likely that 2009 will be another difficult year, with prices continuing to fall in the months ahead.

Despite the Royal Institution of Chartered Surveyors and property website, Rightmove, both recently announcing a rise in new buyer interest, lenders are still demanding high deposits and therefore excluding many first-time buyers from the market.

Overall, new mortgage lending seems to have stagnated at record low levels, with the Bank of England reporting that lending volumes for house purchases in January fell in line with a six month average of just 31,000.

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