Halifax reveals 1.7% fall in house prices in July

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by Kay Murchie

Property prices fell 1.7% in July, according to the Halifax House Price Index released today. The annual rate of decline is up from 6.1% to 8.8%.

The latest figures show that the housing slowdown is gathering pace as the figures are in line with rival Nationwide, who last week said prices were 1.7% lower in July.

According to the Halifax, the average house in the UK is now worth £177,351. Meanwhile, properties are changing hands for 11% less than the average £199,600 that they were at the highest point in August last year, said the lender.

Halifax’s economist, Suren Thiru, said financial pressure on households due to rising living costs means would-be buyers are unable to enter the market and this is resulting in both lower prices and activity levels.

In June, the Halifax made a prediction that house prices would fall by around 9% throughout the year. However, the current figures suggest that price falls have already exceeded that, due to a 10% fall already noted in the first seven months of 2008.

Figures last week from the Bank of England revealed that the number of new mortgages approved for house purchases has fallen by 68.4% in the year to June - the lowest level since records began in 1993.

The fall in mortgage approvals and house prices suggests that activity in the housing market is set to fall even further.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said it is hard to see any near term relief on prices.

Many economists have indicated that property prices could fall by around 20% during 2008 and 2009.

However, on a more positive note, the Halifax has highlighted that the average house price in July was £44,980 higher than in July 2003, and 145% higher than 10 years ago.