The downward trend in house prices shows no sign of losing pace as both Halifax and Nationwide recently reported similar reductions for May.
Halifax’s House Price Index showed a 2.4% fall for the month, but added that while prices were now 3.8% lower than this time last year, they should be measured against the gains of recent years where UK prices have grown by 79% over the 5 years to August 2007.
Chief economist Martin Ellis blamed the decline on a combination of the rapid rise in house prices over recent years, a squeeze on household incomes and the reduction in available credit. However he added that high employment levels, low interest rates and a shortage of new homes were still supporting housing valuations.
Halifax give the average house price as £184,111
Nationwide’s index saw prices fall by 2.5% over the same period (the largest recorded monthly fall in the history of the Nationwide index), which left only a 5% gain over prices two years ago.
Nationwide put the average price at £173,583, £8,000 less that this time last year.
Commenting on the figures Fionnuala Earley, Nationwide's Chief Economist, said:
“Current market conditions inevitably lead to comparisons with the last episode of falling prices.”
However she also said that fewer homeowners buying at the top of the market, larger deposits and more repayment mortgages would mean today’s borrowers are better placed to weather the storm than those in the 1990s.