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House prices 'fell 1.7% in July' House prices 'fell 1.7% in July'
(30 minutes later)
The house price slump continued in July according to the latest monthly report from the Halifax.The house price slump continued in July according to the latest monthly report from the Halifax.
The lender said prices fell another 1.7% last month, taking the annual rate of decline down from 6.1% to 8.8%.The lender said prices fell another 1.7% last month, taking the annual rate of decline down from 6.1% to 8.8%.
The Halifax calculates that the average house in the UK is now worth £177,351, back to the value seen in June 2006.The Halifax calculates that the average house in the UK is now worth £177,351, back to the value seen in June 2006.
The bank said demand from home buyers had been "significantly curbed" by the lack of mortgage funds, high prices and the squeeze on household finances.The bank said demand from home buyers had been "significantly curbed" by the lack of mortgage funds, high prices and the squeeze on household finances.
"Pressure on householders' income, together with a very significant reduction in mortgage finance due to the global financial markets crisis, is constraining potential house buyers' ability to enter the market," said the Halifax's economist Suren Thiru."Pressure on householders' income, together with a very significant reduction in mortgage finance due to the global financial markets crisis, is constraining potential house buyers' ability to enter the market," said the Halifax's economist Suren Thiru.
"This is resulting in both lower prices and activity levels," he added."This is resulting in both lower prices and activity levels," he added.
The Halifax's survey chimes with that of rival mortgage lender Nationwide, which recently calculated that UK property prices had fallen by 8.1% in the year to July.The Halifax's survey chimes with that of rival mortgage lender Nationwide, which recently calculated that UK property prices had fallen by 8.1% in the year to July.
Falling fast
In June, the Halifax forecast that house prices would probably fall by about 9% over the course of this year.In June, the Halifax forecast that house prices would probably fall by about 9% over the course of this year.
However, the Halifax figures suggest that prices have fallen by 10% in the first seven months of the year alone. Falling fast
With mortgage approvals already down by 69% in the past 12 months, activity in the property market looks likely to fall even further.With mortgage approvals already down by 69% in the past 12 months, activity in the property market looks likely to fall even further.
Many commentators suggest prices could easily fall by about 20% in the course of this year and next.Many commentators suggest prices could easily fall by about 20% in the course of this year and next.
The credit ratings agency Standard & Poor's (S&P) suggested recently that a fall of this magnitude might push 1.7 million households into negative equity.The credit ratings agency Standard & Poor's (S&P) suggested recently that a fall of this magnitude might push 1.7 million households into negative equity.
Negative equity describes a situation where the size of borrower's mortgage debt exceeds the value of their property.Negative equity describes a situation where the size of borrower's mortgage debt exceeds the value of their property.