Lender expects little change in house prices over the remainder of the year ‘so long as the economic climate does not worsen substantially’
House prices fell by 0.6% in July, reversing much of the 0.8% increase recorded in June, according to mortgage lender Halifax.
The bank’s latest snapshot of the housing market echoes that of rival lender Nationwide, which reported a 0.7% fall in July. But while Nationwide put the annual decline at 2.6%, Halifax said it was just 0.6%.
The three-month change, which is regarded as a better indicator of the state of the housing market, showed prices remained flat. Halifax now puts the average value of a UK home at £161,094 – about the same as in the summer of 2009.
The bank’s housing economist, Martin Ellis, said the ongoing stability in prices was a result of a lack of activity in the market. According to the Royal Institution of Chartered Surveyors the ratio of house sales to unsold properties has changed very little over the past 21 months.
Ellis said: “Looking forward, we expect little change in prices over the remainder of 2012, so long as the economic climate in the UK does not worsen substantially.”
However, Howard Archer, chief UK economist at IHS Global Insight, said the latest round of price data heightened his belief that the market would fall further over the remainder of 2012.
“With the economy slumping in the second quarter, and the outlook highly uncertain amid worryingly strong domestic and international (mainly eurozone) headwinds, we believe there is a very real and mounting danger that house prices could fall by appreciably more than 3% from current levels.”
Property website Rightmove said homebuyers and sellers were locked in a stand-off over prices, which could lead to a further fall in sales over the coming months.
The website, which surveyed almost 40,000 home movers, found that 49% of those planning to buy within the next 12 months believe house prices in their local area are above what they regard as “fair and reasonable”. Only a third of those expecting to sell held the same view, suggesting they may not be prepared to cut prices to secure a sale.
Recent figures from mortgage lenders show that approvals for new loans fell to an 18-month low in June and, at 44,192, are running at about half of the average monthly level seen since 1993.
The government’s new funding for lending scheme is designed to boost mortgage lending and kickstart the housing market, but so far many of the deals have been aimed at those with large deposits.
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