£2,376 was wiped off the price of the average British house last month, the fifth consecutive month where no growth was reported. This price drop, along with the lack of contractor mortgage finance and buyer confidence, has led economists to warn that the housing market is heading for a double dip.
Nationwide’s monthly house price index showed that prices fell by 0.7% in October and the estimated 0.1% growth in September has been revised to zero. There has been no growth in the housing market since May, and in the last 3 months it dropped 1.5%, the largest three monthly fall since April 2009. Figures from the Land Registry also showed a 0.2% drop in property transaction prices.
Ed Stansfield from Capital Economics believes that prices have to fall from their latest peak by about 20% if the market is going to get back on a sustainable footing.
At the beginning of last week, the BBA reported that home purchase mortgage approvals in September dropped to 31,104, an 18 month low.
Housing market experts have differing views on the state of the market. Howard Archer from Global Insight says there’s not much going for the market at present and he predicts house prices could drop by as much as 10% next year.
The chief economist at Nationwide, Martin Gahbauer, takes a slightly more optimistic view saying that although we have just seen the largest quarterly decrease since April 2009, it is a lot less than the 5 – 6% rates seen during the second half of 2008.
The average house in the UK is now worth £167,354. If you live in London you’re looking at an average value of £293,582, whilst the bad news for Scottish property owners is house prices north of the border fell by 3.4% to an average £139,313. Yorkshire and the North West also recorded falls of 2.7% and 2% respectively.
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