According to its House Price Index, Halifax now sets the average UK house price at £177,351. Although this is a 8.8 percent annual drop, Halifax says house prices are still up one third on 2003 figures.
The fall of 1.7 percent is the first rise in two months, against June’s drop of 1.9 percent and May’s 2.5 percent.
Halifax economist Suren Thiru says: “This drop is due to pressure on householders’ income, together with a very significant reduction in mortgage finance due to the global financial markets crisis, is constraining potential house buyers’ ability to enter the market. This is resulting in both lower prices and activity levels.
The bank also reported the the average rate on outstanding mortgage loans fell by 21 basis points during the first half of 2008 from 5.97% in December 2007 to 5.76% in June 2008. It says this decline happened despite a rise in the average mortgage rate paid by new borrowers – from 5.77% in April 2008 to 5.91% in June 2008. Halifax attributes the overall rate drop to the reductions in the Bank of England’s base rate.
Thiru adds: “A solid labour market, low interest rates and a shortage of new houses continue to support the market. The labour market is the key driver of the housing market and the number of people in employment is at a record high.”