House prices experience first double digit fall since 1983

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by Kay Murchie

According to the Halifax, UK house prices fell 1.8% in August compared with July. Furthermore, according to the lender, the annual fall of 10.9% in August was the first double digit drop since 1983.

However, comparing the average price for August alone, there was a 12.7% decline from £199,612 in August last year to £174,178 in August 2008.

The average cost of a home in the UK now stands at £174,178 which is the same level as it was in February 2006.

The Halifax said market conditions will remain challenging during the next few months despite the recent help on offer to buyers, announced by the Government earlier this week.

New measures include increasing the stamp duty threshold. Properties costing less than £175,000 are now exempt from stamp duty for the next 12 months.

However, first-time buyers in inner London will not benefit from the stamp duty suspension as the average property cost £285,568 last quarter, according to the Nationwide. Prices are also high in the South East, South West and East Anglia, so little will be gained here.

However, those in the north of England will benefit greatly as the average cost of a home is £129,700.

The report on house prices comes as the Bank of England is due to announce its decision on interest rates today.