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House prices 'drop 1.9% in March'

According to Halifax, UK house prices have fallen 1.9% in March compared with the previous months. In the opinion of a lender, now part of Lloyds Banking Group, the current conditions in the housing market would be tough in the remaining months of year 2009. The average UK home now costs £157,226, at least £30,000 less than the previous year. Although there has been a slight rise in house prices in March as reported by the Nationwide, Halifax says the homebuyer confidence was still low.

The annual rate ( which is based on a three-month by three-month comparison) of decline was up slightly with house prices being down by 17.5% in March, compared with a record drop of 17.7% in February. When comparing the average house price from March 2009, compared with March 2008, the drop was 17.6%.

According to Martin Ellis, Halifax Housing Economist, conditions in the UK housing market may be tough during the remainder of 2009, despite the improvements in affordability. He said that due to rising unemployment, low consumer confidence and the squeeze on mortgage finance could be the main causes for the exertion of the "downward pressure" on the housing market over the coming months.

The month-on-month change is in contrast to the sudden bounce in the house prices by 0.9% in March as reported by the Nationwide Building Society, UK. They say that it is too early to forecast that the bottom of the house market had been reached, according to their short term rise price figures.


Nationwide points out that the average UK property price dropped by 4.2% in the first three months of 2009 compared with the last quarter of 2008, according to the less volatile three-month on three-month measure.

Halifax’s suggested house prices had fallen by 2.7% over the last quarter, a much smaller decrease than the 5% to 6% falls it recorded in each of the three previous quarters, ie., in year 2008. Mr. Ellis says that because of more mortgages being approved by banks and building societies recently, houses are more affordable now than at any time since early 2003 and at its toughest in July 2007. He thinks that the existing mortgage-holders were benefitting from the falling bank interest rates.

Mr. Ellis adds that the average existing mortgage borrower was devoting to home loan repayments which fell from a peak of 26.9% of household income in October 2008 to 22.6% in February 2009.

David Smith, senior partner at Dreweatt Neate estate agents, is of opinion that there is an inherent volatility to house price right now and because of this it has become a sideways moving market – with the odd spike up or down - and will remain so most likely for the rest of 2009.

Date : 2009-04-24 09:17:22
Source : BBC


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