House prices down by 1.6% in 2010
House prices fell by 1.3% in December, contributing to a 1.6% decline over the whole of last year, according to figures released by the
says house prices fell by 1.3% in December and 1.6% in 2010, with the rate of decline 'slower' than the falls seen in 2008 Halifax
However, the lender pointed out that the quarterly price change (lenders' preferred measure because it smoothes out monthly volatility) from October to December dropped just 0.9% compared to the previous quarter. Martin Ellis, housing economist for the
The slow rate of decline mirrors what housing minister Grant Shapps said was necessary to allow struggling first-time buyers to find homes they could afford.
However, Ellis said that while continued low interest rates would help make mortgages more affordable for first-time buyers, with new borrowers having to use 29% of their average disposable earnings to meet typical monthly mortgage payments in the last quarter of last year, compared to 48% in mid-2007, it has made it easier for existing homeowners to resist putting their homes on the market.
"Interest rate rates are likely to remain very low for some time. This will continue to support a favourable affordability position for those entering the market and limit financial pressure on existing homeowners to sell.
"Current signs that homeowners are becoming more reluctant to sell would, if continued, help reverse the imbalance between buyers and sellers. Nonetheless, uncertainty about the economy, weak earnings and higher taxes could put some downward pressure on demand"
Howard Archer, chief
He added that the 0.9% fall in the last quarter of 2010 was consistent with his predictions for house prices in 2011: "If our forecast of a 10% correction proves to be right, average house prices on the
Price falls are likely to vary in size around the country depending on the impact of public spending cuts, according to the
"Poor quality properties in areas of oversupply are under real pressure but sought-after properties in areas of high demand are still performing well."
He added: "Come the end of 2011 we expect prices in