House prices fall 2.8% year-on-year
Halifax house prices index shows decreases in yearly, quarterly and monthly measures giving an average house price of £162,657
House prices fell by 2.8% over the the year to February, according to the Halifax – the biggest annual fall since October 2009.
The bank reported a monthly change of -0.9% in house prices and a quarterly change – lenders’ preferred measure – of -0.4%, leaving the average house price at £162,657.
But Martin Ellis, housing economist for the Halifax, downplayed the falls saying there had been little change in house prices over the first two months of 2011, with this month’s 0.9% fall offset by January’s 0.8% gain.
“Overall, we expect a modest 2% decrease in house prices in 2011. Uncertainty over the economic outlook is likely to weigh down on housing demand this year,” he said.
“Fewer properties have been coming on to the market in recent months. This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices.”
The ratio of average house price to national average earnings for a male working on a full-time basis is also at its lowest point for a year, standing at 4.46 compare to 4.63 in February 2010.
Earlier this week, Robert Gardner, chief economist for Nationwide building society, said the low number of first-time buyers was “casting a shadow” over the housing market.
First-time buyers played a crucial role in supporting house prices, but were being excluded from buying by high levels of unemployment, high deposit requirements and expensive property prices.
Howard Archer, chief UK economist for IHS Global Insight, pointed out that the fall is even bigger if taken from the last peak in house prices in March last year: “The Halifax house price index has actually been pretty volatile over the past few months, showing significant fluctuations around an overall modestly declining trend.
“We expect this trend to continue for some time to come. On the Halifax measure, house prices peaked at £168,433 in March 2010 and were down to £162,657 in February 2011. Consequently, house prices in February were 3.4% below their March 2010 peak.”
He added that house prices can be volatile not only from month to month but from survey to survey. The Halifax data contrast with the Nationwide reporting that prices edged up by 0.3% in February following a marginal decline of 0.1% in January.
“The contrasting Halifax and Nationwide data highlight the fact that not too much focus should be put on one particular survey or monthly figure,” he said.
“It is best to try and draw an overall impression on all the data available relating to both house prices and activity. And this to us suggests that the housing market is still stuck in the doldrums. We expect house prices to fall by around 5% in 2011 and ultimately decline by around 10% from their peak 2010 levels.”
Source: Guardian.co.uk 04/03/2011