House prices fell 0.1% in November
House prices fell 0.1% in November and in the three months to November were 2.1% lower than in the preceding three months, according to the Halifax House Price Index.
The rate of decline, however, is significantly lower than the quarterly rate of decline of -5% to -6% during the second half of 2008. House price data on a quarterly basis provides a clearer indication of the overall market trends, smoothing out the volatility caused by the reduced number of monthly transactions in all house prices indices' monthly figures.
Prices in November were 2.4% lower than at the end of 2009.
House prices are now marginally lower than a year ago. Prices in November were 0.7% lower on an annual basis as measured by the average for the latest three months against the same period a year earlier. This was the first annual decline since November 2009 and continues the recent downward trend from a high of 6.9% in May.
House prices in November were 6.5% higher than in April 2009. Despite the recent downturn, prices remain above the trough reached in spring 2009. The average price is now £164,708; £10,045 higher than in April 2009.
The low interest rate environment has reduced the burden of servicing mortgage debt. 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. This key measure of affordability is at a better level than the long-term average over the past 25 years (37%) and is an important factor supporting housing demand.
Housing market activity is softening. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase - a leading indicator of completed house sales - continued on its gentle downward trend, falling for the sixth successive month in October. The number of approvals in October (47,200) was 5% lower than in April (49,700). The ending of the stamp duty holiday on properties between £125,000 and £175,000 at the end of 2009 boosted the number of approvals during 2009 Quarter 4. This will have an adverse impact on annual comparisons over the next couple of months.
Commenting, Martin Ellis, housing economist, said: "Prices fell by only 0.1% in November, and in the three months to November were 2.1% lower than in the preceding three months. 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. There are, however, 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. 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."