Halifax: House prices down 0.5% in October

The average house prices in the UK fell by 0.5 per cent in October, according to the latest house price index released by the Halifax today.

Over the three months to October prices increased by just 0.3 per cent on the previous quarter, continuing the slow downward trend of average prices.

“House prices fell by 0.5 per cent in October. Prices in the three months to October were 0.3 per cent higher than in the previous quarter – a good guide to the underlying trend - continuing the steady easing in house price growth since the end of 2006,” said Halifax chief economist Martin Ellis.

“The rise in interest rates since August last year and negative real earnings growth so far this year are curbing housing demand, leading to a slowdown in both price growth and activity.”

The annual rate of growth in UK house prices is now 8.9 per cent, down from the 10.7 per cent figure recorded in September.

The rate peaked at 11.4 per cent in August, and the fall marks the first time the level has fallen to single figures since February 2007.

The annual rate is expected to fall further in the coming months, as strong gains towards the end of 2006 are removed from the average.

However, prices are being buoyed by two factors.

The UK economy is still sound, with GDP increasing by 3.3 per cent in the third quarter of 2007 – well above the long-term average of 2.5 per cent.

The sound economy and associated high employment – with a record 29.10 million presently in work - will continue to underpin the housing market.

Secondly supply of property is also low, with the lowest levels of property held by estate agents since 2005, according to the Royal Institution of Chartered Surveyors (Rics).

“The UK economy is in a strong position. Sound market fundamentals, including high levels of employment and a shortage in the number of properties available for sale, will continue to support house prices,” concluded Mr Ellis.