December house prices fall faster than forecast

Published 10th Jan 2011

House prices fell at their fastest annual rate in more than a year in December, mortgage lender Halifax said on Monday, but it reckons there will be little movement in house prices in the coming year.

The Halifax house price index fell 1.3 percent last month, after a 0.2 percent fall in November. That took house prices in the three months to December down 1.6 percent compared with a year ago -- the biggest fall since November 2009.

Prices were 3.4 percent lower in December compared with a year ago, taking the average price of a home to 162,435 pounds, according to Halifax.

Britain's housing market started softening last summer and Halifax economist Martin Ellis said he expected limited movement in prices in 2011, although there were downside risks to that forecast.

"Interest rates are likely to remain very low for some time. This will continue to support a favourable affordability position for those entering the market and limit financial pressure on existing homeowners to sell," Ellis said.

"Nonetheless, uncertainty about the economy, weak earnings growth and higher taxes could put some downward pressure on demand."

Many economists expect house prices to fall modestly in 2011 in the face of public spending cuts, tight mortgage availability and limited wage growth. But the drops are not expected to be anything like the scale of the 20 percent fall seen in the recession.

"Latest data and surveys relating to housing market activity remain weak suggesting that the sector is bobbing around in the doldrums and prices will remain under modest downward pressure," said Howard Archer, economist at IHS Global Insight.

Source: ' Reuters '

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