House Price Index shows optimism

There was a brief period of optimism around the end of November as on the 27th Nationwide published their monthly house price index showing a greatly reduced fall of 0.4% for the month. As it turned out this optimism was very short lived as Halifax published their version 1 week later, showing November prices as having the biggest fall this year at 2.6%.

The two lenders often report different figures which highlights that neither are reflective of the entire market, as figures are based on their own mortgage customers.

Nationwide now give an average property value of £158,442 having fallen 13.9% over the last 12 months, with Halifax quoting £163,605 after a drop of 14.9% over the same period, and a return to the same level as in July 2005.

On a more positive note particularly for first time buyers, Halifax reported that the house price to earnings ratio, a key affordability measure, has declined significantly.  The ratio has fallen from a peak of 5.84 in July 2007 to an estimated 4.56 in November 2008; it’s lowest level for more than five years.

Both lenders have also announced that they will not release their usual house price forecasts for the coming year. Nationwide said that consumers’ interests would not be best served by putting out a forecast at the moment due to market volatility.

A spokeswoman for Nationwide said “So much is dependent on confidence, it would be irresponsible for us to put out a figure for 2009.”

Halifax says their decision not to issue a forecast is due to the unknown implications of its merger with Lloyds TSB.

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