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Halifax confirms house price fall Halifax confirms house price fall
(20 minutes later)
UK house prices saw an annual fall of 0.9% in April, says the UK's biggest mortgage lender.UK house prices saw an annual fall of 0.9% in April, says the UK's biggest mortgage lender.
The Halifax also said that prices dropped by 1.3% in April compared with the previous month, pushing the price of the average home down to £189,027.The Halifax also said that prices dropped by 1.3% in April compared with the previous month, pushing the price of the average home down to £189,027.
The lender said it now expected a "mid-single-digit" percentage decline in prices in 2008.The lender said it now expected a "mid-single-digit" percentage decline in prices in 2008.
But it expects bigger falls in Wales and the West Midlands, with Scotland bucking the trend with a modest rise.But it expects bigger falls in Wales and the West Midlands, with Scotland bucking the trend with a modest rise.
Halifax's chief economist, Martin Ellis, said the decline in prices was driven by a squeeze on consumers' spending power and the rapid rise in house prices in the last few years.Halifax's chief economist, Martin Ellis, said the decline in prices was driven by a squeeze on consumers' spending power and the rapid rise in house prices in the last few years.
The figures are the latest to show a slowdown in the housing market, following rival mortgage lender Nationwide's report of a 1% fall in year-on-year house prices in April.The figures are the latest to show a slowdown in the housing market, following rival mortgage lender Nationwide's report of a 1% fall in year-on-year house prices in April.
Earlier in the week the Bank of England said that new mortgage approvals had fallen to their lowest level since records began in 1990.Earlier in the week the Bank of England said that new mortgage approvals had fallen to their lowest level since records began in 1990.
Mortgage deals have continued to rise in price and availability has fallen, despite recent falls in interest rates.Mortgage deals have continued to rise in price and availability has fallen, despite recent falls in interest rates.
Lenders are demanding higher deposits as they tighten their lending criteria.Lenders are demanding higher deposits as they tighten their lending criteria.
Regional variationsRegional variations
The Halifax said the number of mortgages approved to finance house purchases in the first quarter of 2008 was 41% lower than a year earlier.The Halifax said the number of mortgages approved to finance house purchases in the first quarter of 2008 was 41% lower than a year earlier.
It said this was the first year-on-year fall in house prices since February 1996, but the picture would not be the same across the UK.It said this was the first year-on-year fall in house prices since February 1996, but the picture would not be the same across the UK.
It expects Scotland to see a "modest rise" in property prices in 2008, but areas such as Wales and the West Midlands to see bigger falls than the national average.It expects Scotland to see a "modest rise" in property prices in 2008, but areas such as Wales and the West Midlands to see bigger falls than the national average.
The number of first-time buyers has fallen sharply in recent yearsThe number of first-time buyers has fallen sharply in recent years
But Mr Ellis added that a balanced view of the state of the market should take into account recent history. But Mr Ellis added that a balanced view of the state of the market should take into account recent history, with house prices up 190% in the ten years to August 2007.
"Price falls should be viewed in the context of the substantial price rises over recent years," he said."Price falls should be viewed in the context of the substantial price rises over recent years," he said.
"UK prices nearly doubled (190%) over the ten years to August 2007. A growing economy, high employment levels, low interest rates and a shortage of new homes underpin housing valuations." "A growing economy, high employment levels, low interest rates and a shortage of new homes underpin housing valuations."
He expected the Bank of England to cut interest rates further in the coming months "as concrete evidence of an economic slowdown accumulates".He expected the Bank of England to cut interest rates further in the coming months "as concrete evidence of an economic slowdown accumulates".
First-time fall
The Halifax's figures suggest that the number of first-time buyers entering the market has fallen sharply in recent years.
House prices are buckling markedly under the double whammy of stretched buyer affordability and very tight lending conditions Howard Archer, Global Insight What's in store for house prices?
An estimated 300,000 first-time buyers entered the market in 2007, the lowest since 1980, the lender said. This compared with an estimated 900,000 at the peak in 1988.
First-time buyers had also declined sharply as a proportion of all borrowers taking out a new mortgage to finance house purchases, accounting for 30% in 2007 compared with 51% to 52% in 1989 and 1990.
The average deposit put down by first-time buyers in 2007, of £34,381, represented 20% of an average buyer's price compared with 12% in 1989.
Howard Archer, chief UK economist at Global Insight, said low housing market activity would feed through to further cuts in house prices.
"The Halifax's data tend to be more volatile than the Nationwide's, but they are telling the same story - that house prices are buckling markedly under the double whammy of stretched buyer affordability and very tight lending conditions," he said.