The latest Halifax House Price Index shows that UK house prices fell by 3.6% in September, although the annual change shows that prices have increased by 2.6% over the past twelve months. The average house price is now £162,096.
Prices in the third quarter of 2010 were 0.9% lower than in the second quarter of 2010. Quarterly house price data provides a clearer indication of the overall market trends, smoothing out the volatility caused by reduced number of monthly transactions in all house prices indices' monthly figures.
Commenting, Martin Ellis, housing economist, said: “Looking at quarterly figures – a better measure of the underlying trend, house prices in the third quarter of 2010 were 0.9% lower than in the second quarter of 2010. This rate of decline is significantly slower than the quarterly changes of between -5% and -6% that were seen in the second half of 2008. It is therefore far too early to conclude that September's monthly 3.6% fall is the beginning of a sustained period of declining house prices.
“A shortage of properties for sale contributed to an imbalance between supply and demand and was a key factor driving up house prices last year. An increase in the number of properties available for sale in recent months has reduced the imbalance. At the same time, renewed uncertainty about the economy and jobs has caused consumer confidence to falter recently, dampening the demand for home purchase. Together, these factors have been exerting some downward pressure on prices in recent months. In addition, volatility of the month on month measure has increased due to the low transaction levels across the market; this underlines the difficulty of getting a clear reading on the current state of the housing market.
“Prospects for the housing market remain uncertain. Earnings growth is expected to be very modest over the next year, tax rises are on the way and more people are putting their homes on the market. These will all be constraints on the market, dampening house prices. On the positive side, we expect interest rates to remain very low for some time, which will underpin the improved affordability position for homeowners.”
- Review: House prices up again in July (myfirsthomeblog.com)