House Prices Continue Downward Trend

As we have come to expect, both Nationwide and Halifax reported house prices falling further in April, but by differing amounts.

Nationwide reported a drop of 0.4% to an average price of £151,861, and Halifax a much larger drop of 1.7% to £154,716, giving annual reductions of 15% and 17.7% respectively.

Nationwide welcomed the extension to the stamp duty holiday announced in the budget. Before the initial stamp duty announcement last September, only the northern region had a “typical house price” below the old £125,000 limit. However, as house prices have fallen, the “typical house price” is now below the new £175k threshold in all regions except London and the Outer Metropolitan region.

Halifax reported the house price to earnings ratio (a key indicator of affordability) at its lowest level since 2002, and expects rising unemployment, low consumer confidence and the availability of credit to reduce prices further in the coming months.

Martin Ellis, housing economist at Halifax, commented: "There has been a marked improvement in housing affordability for potential first-time buyers in many parts of the UK over the past 18 months.

In the year to March 2009, Northern Ireland has suffered the biggest drop in prices at -22.2 %, closely followed by Greater London and the South East which both recorded losses of over 20%. The least affected areas were the North where property prices have fallen by 11.5% and the South West at -12%.

Nationwide’s Consumer Confidence Survey found that consumers continue to think prices will fall over the next six months, although now at a more moderate rate than previously forecast. This moderation, along with the recent increase in both buyer enquiries and purchase mortgage approvals, has allowed for some optimism, although more sustained evidence is needed before we can call a turning point in the market.

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