House prices dip in November
Annually, prices were down by 0.7% and over the past three months prices saw a drop of 2.1%.
This was the first annual decline since November 2009 and continues the recent downward trend from a high of 6.9% in May.
However, house prices in November were 6.5% higher than in April 2009 and despite the recent downturn prices remain above the trough reached in spring 2009.
Halifax said typical mortgage payments for a new borrower have fallen from a peak of 48% of average disposable earnings in mid 2007 to 29% in 2010 Quarter 3, bringing affordability to a better level than the long-term average over the past 25 years (37%).
Martin Ellis, housing economist at Halifax, said: “The rate of decline in prices on the three month-on-three month measure has picked up over the past few months, but it remains well below the declines of 5-6% in the second half of 2008.
“The highly mixed picture of monthly house price rises and falls recorded this year continued. Such a varied monthly pattern is consistent with a relatively flat underlying trend for house prices.”
Higher numbers of properties for sale combined with reduced demand have caused the recent decrease in prices, said the lender.
“There are some tentative signs that homeowners are becoming more reluctant to put their properties on the market which, if continued, will help to relieve the current downward pressure on prices,” added Ellis. “Interest rates are likely to remain very low for an extended period, which will support the improved mortgage affordability position for homeowners. As a result, we do not expect to see a significant fall in house prices.”
Research house, Capital Economics, was less positive saying: “With the debate as to whether house prices are falling settled, the issue now is how severe future falls will be.”
But Philip Clarke, managing director of Fisher Property Services, agreed with Ellis.
He said: “Although prices may drop again in December and in the early part of 2011 there is unlikely to be an acceleration in price falls given the low interest rate environment, which is unlikely to change for some time yet.
“In the months ahead, we are likely to see more of the same month-on-month volatility with no definitive trend. As long as rates remain at their current level, or in the same ballpark, we do not expect further significant price falls in 2011.”