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House prices fall over 6% in a year

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By Lee Wild

Date: Thursday 10 Jul 2008

LONDON (ShareCast) - The recent slump in house prices slowed a little in June, according to new figures from the Halifax, although they’re still down 6.1% on this time last year.

An average home cost £180,344 last month, 2% less than in May when prices fell 2.5%, said the UK's largest mortgage lender. That’s back where they were in August 2006.

“The decline in prices is driven by a squeeze on spending power, affordability difficulties due to the rapid rise in house prices in the last few years and the decline in credit availability resulting from the crisis in the financial markets,” said the bank.

Prices have risen 150% in the past decade and almost doubled since the bottom of the 1990s housing market slump in July 1995. They increased for all except two of 48 quarters between the last three months of 1995 and third quarter of 2007.

The group’s chief economist Martin Ellis said a strong labour market, historically low interest rates and a shortage of new houses underpin housing valuations.

But Halifax, part of HBOS plc, expects Britain’s economy to continue slowing in 2008 and unemployment to rise, with the MPC's ability to cut base rates below current levels restricted by inflationary pressures.

Today’s survey also revealed that house sales in England & Wales fell by almost a third in 2007 compared to 1988.

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