NAEA: Steady market ‘will return’

Published 06th May 2008

The NAEA is optimistic about the future despite Halifax’s latest gloomy figures…

According to the UK’s biggest mortgage lender, the average UK home has lost more than £7,000 of its value in the last year. The annual rate of price growth turned negative during April for the first time since February 1996, with the prices now 3.7% lower than they were 12 months ago.

The figure was £189,027 last month - in April 2007 it was £196,262, representing a drop of £7,235. The downward trend in April saw the average cost of a home falling by 1.3% in that month alone. The latest gloomy data on the housing market comes just days after Nationwide Building Society said prices fell for the sixth month in a row during April, losing 1.1% of their value.

There is likely to be worse to come, with figures from the Bank of England, also released this week, showing that the number of new mortgages approved for house purchase hit an all-time low during March of just 64,000 - 44% fewer than during the same month of 2007.

Rate rises to blame
A spokesperson for Halifax commented: “The decline in prices is being driven by a squeeze on households' spending power, as well as the rapid rise in house prices during the past few years, both of which have curbed housing demand. Interest rate rises seen between August 2006 and July 2007 had also increased average mortgage costs.

“At the same time, the housing market is coming under pressure from the credit crunch, with higher mortgage costs and lenders' more conservative lending strategy further limiting people's ability to get on to the property ladder or trade up.

Underlying fundamental solid
Peter Bolton King, Chief Executive of the National Association of Estate Agents, took a positive view despite Halifax's figures" “There is no denying that the credit crunch has affected confidence in the market but it is still important to remember that the underlying factors that support the property market remain: low unemployment, historically low interest rates and a pent-up demand for houses.

“Therefore, rather than a dramatic fall that some doom and gloom merchants are predicting, it shows we are looking at a return to a more steady market rather than the fantastic price hikes we have seen in the previous 10 years.“

Source: ' Move Channel Ltd '

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