UK house prices fall, snapping rally

Published 05th Mar 2010

UK house prices dropped last month, according to the latest figures from Halifax, as the mortgage lender became the latest to signal the current rally is losing momentum.


Average prices dropped by 1.5pc last month, Halifax said today, echoing the findings of Nationwide which recorded a 1pc decline for the month. Halifax, which is owned by Lloyds Banking Group, said that by its measure - one of the most widely watched in the market - prices remain 8pc higher than the low they reached in April last year.

Like Nationwide, Halifax said that an increase in the number of people trying to sell their homes and the ending of the temporary holiday on stamp duty had weighed on the market. Martin Ellis, Halifax's housing economist, argued that "an increase in the number of properties for sale has helped to reduce slightly the imbalance between supply and demand."

The strength of the rally in prices since the spring has surprised many given Britain's tentative emergence from its worst recession since the 1930s. While the Bank of England has sought to support the market by keeping interest rates at a record low of 0.5pc, many experts expect banks to keep a much tighter rein on mortgage lending this year as they weather the downturn.

Neither Halifax or Nationwide expects prices to remain on an upward course this year. Kate Barker, a member of the Bank of England's Monetary Policy Committee, cautioned that there may be further adjustment in prices given that mortgage lending remains relatively weak.

"Although the Bank may well hold off from raising interest rates until 2011, the overall economic environment (notably high and likely further to rise unemployment, and low earnings growth) is still far from supportive for house prices," said Howard Archer, an economist at Global Insight.

Source: ' Telegraph '

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