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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. |
| "Completed property sales in March were down 20% on an annual basis," he said. | |
| "The number of new buyers interested in home purchase fell for the sixteenth successive month in March, highlighting the decline in housing demand," he added. | |
| According to the Halifax's figures, prices have fallen by 4.2% in the first four months of the year. | |
| If that rate of decline continues for the rest of 2008 then the annual fall in prices will be nearly 13% by the end of the year. | |
| Downturn | |
| The figures from the Halifax, the UK's biggest mortgage lender, are just the latest to show a big slowdown in the housing market, following rival mortgage lender Nationwide's report of a 1% fall in year-on-year house prices in April. | |
| 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? | |
| 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 their availability has fallen, despite recent falls in interest rates. | |
| Lenders are demanding higher deposits as they tighten their lending criteria, partly because of a lack of funds due to the credit crunch, and partly because they fear further falls in house prices which would weaken the security of their loans to home buyers. | |
| Regional variations | Regional 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 years | The 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, with house prices up 190% in the ten years to August 2007. | 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. |
| "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 | First-time fall |
| The Halifax's figures suggest that the number of first-time buyers entering the market has fallen sharply in recent years. | The Halifax's figures suggest that the number of first-time buyers entering the market has fallen sharply in recent years. |
| 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. | 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. | 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. | 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. | 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. | "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. |