Halifax: House prices fall by 1.2% in August
Wednesday, 07 September 2011 09:18
House prices fell by 1.2 per cent in August, reversing the rise seen in the previous three months, according to the Halifax House Price Index for August.
In the three months to August house prices were 2.6 per cent lower than for the same period a year ago. The average price of a house in the UK now stands at £161,743. The average house price in August was 0.6 per cent less than in December 2010.
House prices are now 4.1 per cent less than their peak level in April 2010, when the average house in the UK cost £168,593.
The number of mortgage approvals increased for the third successive month in July, rising to 49,200 on a seasonally adjusted basis, according to figures from the Bank of England. This is the highest level since May 2010.
There was some good news for those who can save enough of a deposit to get a mortgage as average mortgage rates fell to 3.68 from 3.84 in June. Since mid 2007, the average rate has fallen by two percentage points meaning that mortgage repayments account for just 28 per cent of total disposable income, compared to 48 per cent in mid 2007. This is significantly below the long term average of 37 per cent over the last 25 years and the lowest level since 1999.
Halifax housing economist Martin Ellis said: "A recent decline in average mortgage rates has further boosted home affordability for those able to raise a deposit to make a new purchase.
"Low interest rates are likely to continue to support the market whilst increased uncertainty about the economic outlook and pressures on householders' finances constrain demand."
Putting the latest report into the context of the wider economy, Howard Archer, Chief UK & European Economist at IHS Global said: “The main support for house prices will come from the fact that interest rates are likely to remain very low compared to long-term norms for some considerable time to come.
Mr Archer added: “The marked fall in house prices reported by the Halifax in August reinforces our long-held belief that house prices are headed downwards over the coming months. We currently see house prices falling by around 5% by mid-2012.”
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