House prices fall for third consecutive month

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by Kay Murchie

The Halifax has reported that property prices have fallen for the third consecutive month triggering new fears about the condition of the housing market.

Britain’s biggest mortgage lender said a 1.1% decline last month marked the first time since early 1995 that prices had fallen for 3 months in a row. It was the biggest monthly fall since December 2006 said the Halifax. Prices will fall by over 12% in the coming year if the trend continues at this level.

Martin Ellis of the Halifax stressed the British economy was in good shape but added that the interest rate hikes between July 2006 and July 2007 has had an impact. Mr Ellis added that increased mortgage repayments and a decline in real earnings have put pressure on households’ income, resulting in a slowdown in both house price growth and activity.

Companies are urging the Bank of England to cut interest rates today to prevent the economy heading towards recession next year. The Bank’s Monetary Policy Committee will announce its decision at noon today. Many analysts believe a rate cut won’t occur until early next year.

Finally, the Financial Services Authority said that 1.4 million homeowners will struggle to refinance their mortgages next year because of the ‘very real prospect’ that the global credit crunch will deteriorate.