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UK House Prices Fall To August 2004 Levels

Wed, 07 Jan 2009
House prices in the UK fell by a further 2.2 per cent in December to their lowest level for four and half years, according to research from Halifax .

The mortgage lender’s house price index revealed that average property prices dropped by 18.9 per cent in 2008, the largest ever drop recorded in a calendar year.

The Halifax figures mean the average home is now worth £159,896 – some £37,000 less than a year ago and December's decline marks the eleventh consecutive month in which prices have fallen.

The bank said that although it does not expect things to improve over coming months, any further drops will be accompanied by increased demand from new buyers.

Martin Ellis, chief economist at Halifax, said: "Continuing pressures on incomes and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to exert further downward pressure on the market over the coming months."

"But a number of factors will help to support demand and should help to limit the downturn," he added.

Improving housing affordability and an easing in the pressure on the majority of households' finances should support market activity and prices ."

Halifax also said Britain’s estate agents reported the first increase in newly agreed sales for 18 months in November and the first rise in new buyer enquiries since October 2006, signalling that house market activity is starting to stabilise.

Affordability is also at its lowest level for five and a half years with the house price to average earnings ratio falling to an estimated 4.4 in December 2008 from a peak of 5.84 in July 2007, according to the lender.
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