Money News
Latest figures from the Halifax show house prices falling in March by 2.5% - the steepest decline since the last major housing market recession back in the early 1990s. Meanwhile, on a year-on-year basis, prices were just 1.1% higher - the average cost of a property standing at a seasonally adjusted £191,556 last month.
Noting the fall, economic consultancy, Capital Economics, said the 'stunningly large' drop in house prices in March is the second largest in the history of the Halifax index, beaten only by the fall recorded in 1992 when the housing market was in the grips of a full-blown crash. "There is a clear risk that this housing market correction will be sharper and deeper than we currently expect."
As expected, there was a mixed regional picture - price rises being seen in Greater London (1.6%), East Anglia (1.4%) and the East Midlands (2.2%). However, price falls were seen in a number of regions - the largest being the West Midlands (-5.0%) and Wales (-4.7%). Also in the minus column were the South West (-2.6%), Northern Ireland (-1.5%), Yorkshire & the Humber (-0.5%) and the North West (-0.5%).
Halifax says it expects there to be a modest (low single digit) decline in UK house prices this year. Any declines, however, should be viewed in the context of the significant price rises over recent years. UK prices have increased by 171% over the past ten years and by 51% over the last five years. The average UK price has risen by £120,860 during the past decade from £70,696 to £191,556.
It adds that sound economic fundamentals are supporting house prices. These include a strong labour market, low interest rates and a shortage of new houses. Employment is at a record high and unemployment continues to fall. However, expectations are for a modest rise in unemployment later in the year, although the scale of the increase is unlikely to cause widespread difficulties for households, the lender says.
08 April 2008 © Moneyextra.com
Moneyextra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.