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House prices fall 1.9%

Friday, 3 April 2009 2:16 PM

House prices fell 1.9 per cent in March, according to the UK's biggest mortgage lender Halifax.

The March decline, which was lower than February's 2.3 per cent fall, takes the annual drop to 17.5 per cent, according to the Halifax house price index, although figures released by Nationwide this week revealed a 0.9 per cent rise.

However, both mortgage lenders agreed the data looked promising.

"Completed sales in England and Wales halved between 2007 and 2008, but there are some very tentative signs that activity may be beginning to stabilize," Martin Ellis, Halifax's housing economist said.

The house price to earnings ratio - a key measure of housing affordability - is at its lowest level since early 2003 at 4.34, Halifax said. The long-term average is 4.0.

Both Nationwide and Halifax warned the market may have some way still to fall.

"Conditions in the housing market are likely to be tough during the remainder of 2009 despite the improvements in affordability," Mr Ellis added.

David Smith, senior partner at Dreweatt Neate estate agents, said: "These contradictory figures underline just why you can't take yesterday's Nationwide data to be the start of a sustained rise in prices.

"There is an inherent volatility to house prices right now and because of this a sideways-moving market, with the odd spike up or down, remains the most likely course for the rest of 2009."

Simon Rubinsohn, Royal Institution of Chartered Surveyors (Rics), chief economist added: "The data released this morning demonstrates that it would be premature to assume that house prices have yet bottomed out despite the more positive figures published by Nationwide yesterday.

"It is important that the government does not use the very modest pick-up in sentiment in the sector as an excuse to not provide further measures to help support accessibility to the market, which has been badly damaged by the decisions of lenders to scale back loan to value ratios."

The Liberal Democrats have also warned it is too soon to see the Halifax HPI as positive news for the property market. Lib Dem housing spokesperson, Sarah Teather said: "Today's figures suggest it is premature to talk about the green shoots of recovery.

"The priority must be getting practical help to families who are struggling now.

"With tens of thousands of people facing the misery of repossession and homelessness, the last thing we need from the government is complacency about a possible recovery."

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