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| UK house prices 'fell 2% in June' | UK house prices 'fell 2% in June' |
| (about 1 hour later) | |
| UK house prices fell by 2% in June, according to the UK's biggest mortgage lender, the Halifax. | UK house prices fell by 2% in June, according to the UK's biggest mortgage lender, the Halifax. |
| The drop meant that prices were 6.1% lower than a year ago, with the average home costing £180,344. | The drop meant that prices were 6.1% lower than a year ago, with the average home costing £180,344. |
| The lender said that average house prices were now at the same level as in August 2006. | The lender said that average house prices were now at the same level as in August 2006. |
| But it said that strong employment levels and low interest rates meant that housing values retained firm foundations despite recent price falls. | But it said that strong employment levels and low interest rates meant that housing values retained firm foundations despite recent price falls. |
| A squeeze on spending power, rapid house price growth in recent years and the lack of availability of mortgages were behind the latest monthly fall, said Halifax chief economist Martin Ellis. | A squeeze on spending power, rapid house price growth in recent years and the lack of availability of mortgages were behind the latest monthly fall, said Halifax chief economist Martin Ellis. |
| "These factors have curbed housing demand. There has been a slight fall in 'real' earnings over the past year," he added. | "These factors have curbed housing demand. There has been a slight fall in 'real' earnings over the past year," he added. |
| More falls? | More falls? |
| The Halifax recently forecast that UK house prices are set to fall by 9% this year - having revised its views from February that the market would be "flat" in 2008. | The Halifax recently forecast that UK house prices are set to fall by 9% this year - having revised its views from February that the market would be "flat" in 2008. |
| FROM THE TODAY PROGRAMME More from Today programmeProperty market home truths | FROM THE TODAY PROGRAMME More from Today programmeProperty market home truths |
| The latest survey from rival the Nationwide said that house prices fell by 0.9% on average last month, with the average home costing 6.3% less than a year ago. | The latest survey from rival the Nationwide said that house prices fell by 0.9% on average last month, with the average home costing 6.3% less than a year ago. |
| The Halifax's figures came as house builder Barratt confirmed more job cuts in the sector. Barratt said it was cutting 1,200 jobs owing to the housing slump and the squeeze on mortgage lending. | The Halifax's figures came as house builder Barratt confirmed more job cuts in the sector. Barratt said it was cutting 1,200 jobs owing to the housing slump and the squeeze on mortgage lending. |
| The survey was released on the same day that the Bank of England's Monetary Policy Committee (MPC) announced its decision to keep interest rates on hold at 5%. | |
| "We expect the UK economy to slow further in 2008, with a further rise in unemployment and low interest rates, accepting that inflationary pressures will restrict the MPC's ability to reduce base rates below current levels," said Mr Ellis. | "We expect the UK economy to slow further in 2008, with a further rise in unemployment and low interest rates, accepting that inflationary pressures will restrict the MPC's ability to reduce base rates below current levels," said Mr Ellis. |
| Mortgage squeeze | Mortgage squeeze |
| The annual rate at which house prices fell was at its greatest level since March 1993, the Halifax said. | The annual rate at which house prices fell was at its greatest level since March 1993, the Halifax said. |
| But Mr Ellis stressed that average UK house prices remained 2% higher than two years ago, more than 10% higher than in June 2005 and almost 40% above that in June 2003. | But Mr Ellis stressed that average UK house prices remained 2% higher than two years ago, more than 10% higher than in June 2005 and almost 40% above that in June 2003. |
| "A strong labour market, low interest rates and a shortage of new houses underpin housing valuations," he said. | "A strong labour market, low interest rates and a shortage of new houses underpin housing valuations," he said. |
| But some analysts were gloomy about the data. | But some analysts were gloomy about the data. |
| "[These are] grim numbers and do little to suggest things will get better any time soon. In fact we expect to be in negative double-digit territory from next month," said Alan Clarke, UK economist at BNP Paribas. | "[These are] grim numbers and do little to suggest things will get better any time soon. In fact we expect to be in negative double-digit territory from next month," said Alan Clarke, UK economist at BNP Paribas. |
| Howard Archer, chief UK and European Economist at Global Insight, said: "The latest data on the housing market continue to be very worrying, and there appears to be no let up in the current downward spiral." | Howard Archer, chief UK and European Economist at Global Insight, said: "The latest data on the housing market continue to be very worrying, and there appears to be no let up in the current downward spiral." |
| The Halifax said that in 2007, before the full force of the credit crunch cut the availability of mortgages, buyers were putting down larger deposits. | The Halifax said that in 2007, before the full force of the credit crunch cut the availability of mortgages, buyers were putting down larger deposits. |
| Some 56% of new borrowers put down a deposit of more than 10% in 1989 and 1990. But that figure had risen to 82% of all new borrowers during the final quarter of 2007. | Some 56% of new borrowers put down a deposit of more than 10% in 1989 and 1990. But that figure had risen to 82% of all new borrowers during the final quarter of 2007. |
| The Halifax estimated that 300,000 first-time buyers entered the market in 2007, the lowest number since 1980. | The Halifax estimated that 300,000 first-time buyers entered the market in 2007, the lowest number since 1980. |
| The choice for those only able to offer a small deposit has plunged in the last month, according to financial information service Moneyfacts. | The choice for those only able to offer a small deposit has plunged in the last month, according to financial information service Moneyfacts. |
| It said there were now 80 different home loans available for people with a 5% deposit, down from 134 at the beginning of June and more than 1,000 in July last year. | It said there were now 80 different home loans available for people with a 5% deposit, down from 134 at the beginning of June and more than 1,000 in July last year. |
| Some borrowers would have been hoping that the Bank of England cut interest rates following its latest meeting, especially those who have come off fixed-rate deals and are currently paying at the standard variable rate (SVR). | |
| But Moneyfacts said 15 lenders failed to cut their SVR since April's reduction in the base rate, and 38 lenders did not pass on the full quarter percentage point cut. | But Moneyfacts said 15 lenders failed to cut their SVR since April's reduction in the base rate, and 38 lenders did not pass on the full quarter percentage point cut. |
| Are you affected by issues covered in this story? Are you trying to buy or sell property? Do you work in the property business? Send us your comments using the form below. | Are you affected by issues covered in this story? Are you trying to buy or sell property? Do you work in the property business? Send us your comments using the form below. |