January saw house prices unchanged from the previous month, in keeping with the predicted slowdown for 2008, reports the latest house price index from the Halifax. The three month change to January is 1.0% lower then in the previous quarter, and the annual rate of house price inflation now sits at 4.5%.
Mortgage approvals are still going down; the numbers of approvals were 35% lower in the last quarter of 2007 than in the same period the pervious year, but many commentators expect things to pick up as the year goes on.
The economy remains sound, according to experts at the Halifax. Martin Ellis, chief economist there said: ‘We expect sound economic fundamentals and lower interest rates to support house prices. Nationally, we predict that house prices will be flat in 2008. The economy is expected to expand this year, albeit at a slower pace than in the last two years.’
Mr Ellis also predicted that the Bank of England is expected to cut interest rates again over coming months which should ease the pressures on the economy, supporting the housing market.
Ed Stansfield from economists Capital Economics said they predict that this stagnant situation shouldn’t last long: ‘The falls in house prices that got underway in the final quarter of 2007 stalled over the turn of the year, at least according to the Halifax,’ he said. ‘But with affordability pressures still elevated and tighter lending criteria likely to curtail prospective home-buyers’ purchasing power, we do not expect this pause to be prolonged. Further falls in house prices are more likely than not over the rest of 2008.’