House Prices Fall To Lowest Level Since July 2009
House prices in the UK have fallen to their lowest level since July of 2009, according to the Halifax. Prices slid 0.9% in December, following a 1% decline in November, despite remaining relatively solid during the year.
The average house price stood at £160,063 at the end of 2011, a total fall in 1.3% from the end of 2010, according to the Halifax.
In a statement accompanying the release of the data, Martin Ellis, the company's housing economist, said that prices had held up well during 2011 despite the worsening economic climate, and that if the UK can stave off recession, there was reason to believe that the downward trend could be halted.
"If the UK can avoid recession, we expect broad stability in house prices in 2012," he said.
"There is, however, considerable uncertainty regarding the prospects for the UK economy which will, to a large extent, depend on how events in the Eurozone unfold. In addition, the extent to which households choose to reduce their debts will also affect growth. As a result, the outlook for house prices is also uncertain."
At IHS Global Insight, however, chief European and UK economist Howard Archer warned that the winter trend could continue into 2012.
Archer is predicting that house prices will fall around 5% during 2012.
"We suspect that low wage growth, a markedly weakening labour market and major concerns over the economic outlook will limit potential buyers and weigh down on house prices," Archer wrote in a note to clients on Friday morning.
"On top of this, a significant number of people are still finding it hard to get a mortgage. Indeed, there is a growing likelihood that banks’ willingness to lend to prospective home buyers will diminish due to the weak economic environment while there is also the very serious risk that banks’ future ability to lend could be increasingly constrained by difficult wholesale funding conditions."
The number of mortgage approvals rose to its highest point in two years in November 2011, according to figures from the Bank of England, although most analysts believe that as banks tighten their provision of credit, that number will fall back in 2012.
The construction sector also saw nascent signs of recovery in November, according to figures released on Wednesday.