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Latest data from the Halifax (October) shows the downward trend in house prices continuing - prices falling by 0.5% during the month, giving a year-on-year increase of 8.9% (September: 10.7%), 0.3% for the quarter.
The standardised average price (seasonally adjusted) now stands at £197,248.
The numbers come against a backdrop of a strong UK economy with gross domestic product (GDP) increasing at an annual rate of 3.3% in Q3 2007, comfortably above the long-term average rate of 2.5%.
Meanwhile, the mixed pattern of monthly price rises and falls - as has been the case in recent months - is a typical feature of a more subdued housing market. Hence it isn't unusual to see successive monthly falls in these circumstances, says the Halifax. It comes as the level of employment is at a record high - the number of people in employment increasing by 82,000 over the past year to 29.10 million. And with a sound economy in place as well as a shortage in the number of properties available for sale, house prices will continue to be supported.
That said, mortgage approvals to fund house purchase fell by 6% in September to 102,000 (seasonally adjusted), while approvals in Q3 2007 were 11% lower than in Q3 2006 (Source: Bank of England). Meanwhile, new buyer interest in purchasing a house fell for the tenth consecutive month in September (Source: RICS), demonstrating that potential buyers have become more cautious.
Against this cautious background the fall in the annual rate of inflation is expected to continue over the next few months as the strong monthly house price gains during the autumn of 2006 drop out of the year-on-year comparisons, says the Halifax.
08 November 2007 © Moneyextra.com
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