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House Price Drop for December

House prices fell by 1% in December, according to the latest figures from Halifax. However, prices in Q4 were higher than Q3, which contributed to an overall increase year on year, which the report puts at 9.9%.

This contrasts with Nationwide?s figures for December, which said house price inflation was up to 9.3% in the last quarter of 2006.

Despite the more subdued figures from Halifax, the lender still maintains that growth in the market will continue into 2007: ?House prices fell by 1 % in December, but it remains too early to conlude that this indicates a genuine slowdown in the housing market,? said Martin Ellis, Chief Economist.

?Overall prices in the final quarter of 2006 were 4.2% higher than in the previous quarter, making the strongest quarterly rise since 2004.

?Continued economic growth, rising employment and an ongoing lack of supply will continue to drive up house prices over the coming months. Higher interest rates, greater pressure on household finances and subdued real earnings grwoth will, however, constrain houseing demand.?

The report also notes that for the first time, the average price of a house in London – £287,176 – exceeds the Inheritance Tax threshold (currently £285,000), leading Halifax to call again for an increase to £430,000 to allow for house price inflation over the past decade, and for the Government to make a commitment to linking the threshold to house price inflation in the future.

House prices are expected to grow in total by 4% in 2007, according to Mr Ellis’ estimations.