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Halifax says house prices lower than last year

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Date: Friday 02 May 2008

LONDON (ShareCast) - House prices fell by 1.3% in April and are now 0.9% lower than this time last year according to the latest survey by Halifax, the UK's largest mortgage lender. It is the second report this week indicating a decline in prices over the past 12 months.

The former building society added it expects to see a mid single digit percentage decline in UK house prices this year, though some areas such as Scotland, are still likely to record modest price rises.

The decline in prices is driven by a squeeze on spending power and the rapid rise in house prices in the last few years. These factors have curbed housing demand. The rise in interest rates between August 2006 and July 2007 has increased average mortgage costs. A decline in 'real' earnings over the past year has also constrained housing demand, Halifax said.

The Halifax survey follows a report by rival Nationwide on Wednesday that also showed house prices fell on an annual basis for the first time in 12 years in April as prospective buyers found it increasingly difficult to finance property purchases.

The average price of a home dropped 1% to £178,555 on the same time last year, something that hasn’t happened since March 1996, said Nationwide.