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9 October 2008

Halifax: house prices fall 1.3% in September

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by Kay Mitchell

Halifax: house prices fall 1.3% in September

Yesterday, the housing market received some long-awaited good news following the Bank of England’s decision to cut interest rates by half a percentage point.

However, the Halifax has today reported that UK house prices experienced a fall of 1.3% in September, dealing a blow to those already in or faced with the prospect of negative equity.

According to the Halifax, a further £2,000 has been wiped off the value of an average home, taking the average cost to £172,108, similar to the average price of a UK home in January 2006.

This is the eight consecutive month that house prices have fallen and the lender said the decline meant the annual fall now stood at 12.4%. However, when comparing prices in just September with the same month in 2007, the fall in prices reaches 13.3% – the highest fall recorded by the Halifax since it started collecting data in 1987.

However, on a positive note, the lender said the rate of decline was starting to stabilise when comparing three-month figures. Their figures reflect those from the Nationwide who last week said there is evidence that the rate of decline is stabilising.

Commenting on the figures, Martin Ellis, chief economist at the Halifax, said the price fall in the three months to September was very similar to that in the previous quarter, suggesting that the trend rate of decline may be beginning to stabilise.

However, he added that conditions will still remain challenging in the market due to the reduction in the availability of home loans.

However, Mr Ellis welcomed the Bank of England’s interest rate cut and concluded that mortgage borrowers, particularly those with a tracker mortgage, will benefit.

In the meantime, Seema Shah at Capital Economics, believes house price falls still have much further to go. The organisation recently predicted that prices will fall by 35% from their high in August 2007.

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