House prices fell by 2.4% last month and were 3.8% lower on an annual basis, according to a new report.
However, these price falls should be measured against the considerable gains that have been achieved in recent years, says the latest Halifax house price index.
Prices in the UK soared by 70% over the five years up to August 2007. The average price rose by more than £88,000 between August 2002 and August 2007.
‘The decline is caused by the difficulties created for potential house purchasers by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability. These factors have curbed housing demand. High employment levels, low interest rates and a shortage of new homes support housing valuations,’ says Martin Ellis, chief economist at the Halifax.
Employment increased by 117,000 in the three months to March compared with the previous quarter, taking figures to a record high of 29.54 million.
There has been little change in ‘real’ earnings over the past year. Average earnings rose by 4% in the year to March compared to a 3.8% increase in retail price inflation. Sharp increases in fuel (9%) and food (7%) have made it more difficult to fund the purchase of a house.
The number of new buyers has fallen for the seventeenth successive month and the number of mortgages in April this year was 49% lower than last year.
* Above picture: Grade II listed house for sale in Camelford, Cornwall with Strutt & Parker for £750,000