House prices fall for second consecutive month

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by Kay Murchie

According to the latest house price index released by the Halifax, property prices fell for the second consecutive month. Britain’s biggest mortgage lender showed a 0.5% fall in prices in October following the 0.6% fall in September.

The average cost of a home is now £197,247 according to the Halifax. The annual rate of growth in UK house prices is now 8.9%, down from the 10.7% figure recorded in September.

Martin Ellis of the Halifax said prices in the 3 months to October were 0.3% higher than in the previous quarter, a good guide to the underlying trend, continuing the steady easing in house price growth since the end of 2006.

Five interest rate hikes since August last year and negative real earnings growth so far this year are reducing housing demand, leading to a slowdown in both price growth and activity added Mr Ellis.

The last time Halifax reported prices falling for 2 consecutive months was in May 2005, when the average house price was £162,600.

However the Nationwide, Britain’s biggest building society, announced earlier this month that prices had risen by 1.1% in October, but experts warn that monthly figures can be volatile.

The majority of data and survey evidence are pointing to weakening housing market activity and cooling prices in the face of slowing activity, growing affordability pressures and the tightening of lending criteria. Halifax data is certainly consistent with this said Howard Archer, chief UK economist at analysts Global Insight.