From www.domusinc.gr

U.K. News
Halifax reports falling house prices
By Times Online  
Sep 3, 2004

The housing price boom is over - it's official. Certainly, the announcement today by Halifax, Britain's largest mortgage lender, that prices fell 0.6 per cent in August, the first fall in two years and the steepest in four, would seem to confirm data published earlier this week.

The Bank of England's five increases of 0.25 per cent in the base interest rate appears to have worked in tempering house prices, which increased 1.3 percent in July, Halifax said.

"Evidence of a housing market slowdown is now becoming ever more widespread and marked, as higher interest rates increasingly bite on top of stretched affordability ratios," said Howard Archer, an economist at Global Insight.

The Halifax survey showed house prices falling for the first time month on month since December 2002. The survey has recorded only ten monthly price falls in the past five years, during which period house prices have doubled.

Earlier this week, the Nationwide building society said that the cost of a home inched ahead by just 0.1 per cent during the month, compared with 2.1 per cent during July. The company said it was the slowest advance in prices for two and a half years.

However, the Halifax said that prices in the three months to August were still up 21.3 per cent on a year earlier.

The Bank of England said earlier this week that the number of new mortgages approved last month fell at the fastest rate in more than a decade. That data confirmed similar figures given by the British Bankers' Association last week.

Also this week a report from Rightmove, the property website, that said asking prices in England and Wales fell by an average of 1,217 during the two weeks to August 28.

"Our view of the mainstream market is that it is definitely leveling out,'' Aubrey Adams, the chief executive of the up-market estate agents Savills, said this week.

Estate agents have questioned whether lender reports suggesting strong house price growth through the summer accurately reflected the market. It now appears that reports from lenders have caught up with anecdotal evidence suggesting a softer market.

The Bank of England made similar comments in its August Inflation Report, saying that house-price inflation "appears to have peaked and several indicators of housing market activity point to further moderation." The Royal Institution of Chartered Surveyors also said that the market looked to have flattened.

The Bank's Monetary Policy Committee has raised interest rates five times since November and meets again next week.

"With consumer spending also showing signs of moderating in July and August, there is a growing possibility that the Bank of England could leave interest rates unchanged through the rest of this year," Mr Archer said.

Martin Ellis, chief economist at the Halifax, said: "We continue to expect house price inflation to slow gradually over the remainder of 2004 and into next year as higher interest rates and the increasing difficulties faced by potential first-time buyers in entering the market curb housing demand."

 



© Copyright by domus inc.