House prices fell at their sharpest annual rate in at least 25 years in September, as the credit crunch continued to take its toll on the housing market, according to data from Britain’s biggest mortgage lender.
HBOS said its Halifax house price index fell 1.3% in September, taking prices down 12.4% in the three months to September compared with a year ago, the sharpest fall since records began in 1983. Analysts said that although the Bank of England’s emergency half percentage point cut in borrowing costs on Wednesday would provide some relief to homeowners, house prices still had further to fall as lending conditions were still tight.
“House prices seem poised to fall substantially further as the fundamentals remain largely negative,” said Howard Archer, economist at Global Insight. “Credit conditions remain extremely tight and this continues to exert upward pressure on many mortgage rates and limit the amount of mortgages available.”
September’s monthly fall in house prices was the smallest in seven months, taking the average house price down to £172,108 ($298207). In August, prices fell 1.8% on the month, for a 10.9% drop year-on-year.
Halifax chief economist Martin Ellis reckons prices have still further to fall. “We’ll continue to see downward pressure on prices for a while yet, but yesterday’s rate cut is going to be a significant boost to borrowers,” he said. “The pressure is going to remain through the rest of this year and a lot of next year.” (Reuters)