2011 shaves 1.3% off house prices

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by Gill Montia

House prices in the final quarter of 2011 were 0.1% lower than in the previous quarter, according to Halifax.

The value of the typical home slipped 0.9% between November and December, to £160,063, but modest increases earlier in the year meant prices ended 2011 down only 1.3%, having recovered from an average annual loss of 4.2% in May.

Last year, there were six monthly falls, five increases and one month of unchanged prices and Halifax consider that house prices held up well in the face of deteriorating economic conditions and substantial pressure on household finances.

Looking ahead, the lender’s housing economist, Martin Ellis, comments: “If the UK can avoid recession, we expect broad stability in house prices in 2012.”

However, Mr Ellis warns of “considerable uncertainty” regarding the prospects for the UK economy, given the unresolved eurozone debt crisis.

According to the economist, the extent to which households choose to reduce their debts will also affect growth.

Nationwide recently reported that for the UK as a whole, the average house price stood at £164,785 in December, following a 0.3% increase during Q4 which helped produce an annual price rise of 1.1%.

However, the building society warned that affordability remains an issue.

At 5.4, the average house price to earnings ratio remains above the long-term average of around four.