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Home prices fall for second month Home prices fall for second month
(about 2 hours later)
UK house prices fell for a second consecutive month in December, the Nationwide building society says.UK house prices fell for a second consecutive month in December, the Nationwide building society says.
Prices dropped 0.5% in December after slipping 0.8% in November, but property prices were still up 4.8% year-on-year from December 2006, it said.Prices dropped 0.5% in December after slipping 0.8% in November, but property prices were still up 4.8% year-on-year from December 2006, it said.
The average price of a UK property rose by £8,334 over the year, putting it at £182,080 at the end of 2007.The average price of a UK property rose by £8,334 over the year, putting it at £182,080 at the end of 2007.
Nationwide said that this month's interest rate cut should help the market recover somewhat later in 2008.Nationwide said that this month's interest rate cut should help the market recover somewhat later in 2008.
"The housing market has weakened significantly in the closing months of 2007 after holding up more strongly than expected in the earlier part of the year," said Fionnuala Earley, Nationwide's chief economist."The housing market has weakened significantly in the closing months of 2007 after holding up more strongly than expected in the earlier part of the year," said Fionnuala Earley, Nationwide's chief economist.
Rankings
Nationwide data also showed that St Albans was the most expensive place to buy property in a survey of 30 towns and cities.
The average house price in the Hertfordshire town rose 13% to £347,563 over the year.
FASTEST HOUSE PRICE GROWTH Belfast 32%Aberdeen 25%London 16%Oxford 13%St Albans 13% Source: Nationwide Experts' view on 2008 prices
Belfast saw the biggest rise in house prices, up 32% over the year to £306,698 - an increase of £201 a day.
Durham and Newcastle saw the survey's only fall in house prices.
Average prices fell 3% in both places to £152,902 and £178,309 respectively.
'Worse position''Worse position'
She said lower interest rates in 2008 should help demand recover a little, but said it was unlikely that there would be a big recovery like the one seen after the interest rate cut in 2005. Nationwide said lower interest rates in 2008 should help demand recover a little, but said it was unlikely that there would be a big recovery like the one seen after the interest rate cut in 2005.
"This is mainly because housing affordability is starting from a much worse position than in 2005, while interest rate cuts have started from a higher and more restrictive level," she said."This is mainly because housing affordability is starting from a much worse position than in 2005, while interest rate cuts have started from a higher and more restrictive level," she said.
DECLINES/SLOWEST HOUSE PRICE GROWTH Durham -3%Newcastle -3%Sheffield 1%Birmingham 1%Northhampton 2% Source: Nationwide
The three-month on three-month rate of growth - a smoother indicator of house price trends - fell from 1.4% in November to 0.9% in December, the lowest since November 2005.The three-month on three-month rate of growth - a smoother indicator of house price trends - fell from 1.4% in November to 0.9% in December, the lowest since November 2005.
Nationwide said the turmoil in the financial markets resulting from the US sub-prime mortgage market, as well as the problems experienced by Northern Rock, had undermined confidence in the property market.Nationwide said the turmoil in the financial markets resulting from the US sub-prime mortgage market, as well as the problems experienced by Northern Rock, had undermined confidence in the property market.
The Bank of England's monetary policy committee voted unanimously to chop interest rates from 5.75% to 5.5% at its last meeting.
Many analysts expect further cuts in the new year to support the flagging housing market and the wider economy.
Pound falls
News of falling house prices pressured the pound as the prospect of more interest rate cuts made the currency less attractive.
The pound traded at 73.42 pence per euro, the lowest in its 8-year history.
On Thursday, industry data showed that mortgage approvals at the biggest UK banks had steadied, but lending levels for November are still more than 40% below the same month last year.
The British Bankers Association (BBA) said that new mortgage approvals for house purchases stood at 44,811, up from 44,321 in October.
Commercial property is also feeling the affects of the market slowdown.
Investors who bought office building in the southeast at the top of the property bubble this year have seen paper losses of up to 26%, the Financial Times reported, citing research from estate agents Knight Frank.