Fool News: House Prices Stagnate

Mortgages and Home

Updated on 16 December 2008 | 0 Comments

House price inflation has fallen to its lowest levels since November 2005. What's next for the housing market?

The annual rate of house price inflation fell below 5% in January, dipping to its lowest level since November 2005.

What's more, house prices remained broadly unchanged in January, with the average cost of a British home remaining stagnant at £197,244, according to the latest Halifax House Price Index.

The property market slowdown has led to annual house price inflation falling to 4.5%, more than half the levels of same period between January 2006 - 07 (9.9%).

In addition, the Bank of England reported that the number of mortgage approvals during the final three months of 2007 was 35% lower than the same period last year.

The reality of the slowdown in the housing market is also backed by Hometrack, which reported a 3.5% decrease in new buyers registering with agents compared to December. This was matched by a 2% month-on-month decrease in the number of properties being placed on the market.

This suggests that not only do fewer people want to buy a home, but also that fewer people are willing to put their property on the market in current conditions.

Still, it's worth remembering that house prices did stay stable in January, so we don't appear to be in a housing crash just yet. And although there was a slowdown in new buyer enquiries during the past three months, this is beginning to flatline, suggesting the downturn in activity is beginning to stabilise.

Halifax predicts that house prices will remain unchanged in 2008. It also forecasts two interest rate cuts this year, with one possible cut looming this Thursday.

It hopes the reductions will help prevent the economy slowing too sharply, and buoy the housing market to help prevent any sudden price drops.

So with the true picture of the housing market still unclear, the next question on everybody's lips is: To cut or not to cut?

We'll find that one out on Thursday.

More: The Truth About House Prices | Get A Magnificent Mortgage With The Fool

Comments

Be the first to comment

Do you want to comment on this article? You need to be signed in for this feature

Copyright © lovemoney.com All rights reserved.

 

loveMONEY.com Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FCA) with Firm Reference Number (FRN): 479153.

loveMONEY.com is a company registered in England & Wales (Company Number: 7406028) with its registered address at First Floor Ridgeland House, 15 Carfax, Horsham, West Sussex, RH12 1DY, United Kingdom. loveMONEY.com Limited operates under the trading name of loveMONEY.com Financial Services Limited. We operate as a credit broker for consumer credit and do not lend directly. Our company maintains relationships with various affiliates and lenders, which we may promote within our editorial content in emails and on featured partner pages through affiliate links. Please note, that we may receive commission payments from some of the product and service providers featured on our website. In line with Consumer Duty regulations, we assess our partners to ensure they offer fair value, are transparent, and cater to the needs of all customers, including vulnerable groups. We continuously review our practices to ensure compliance with these standards. While we make every effort to ensure the accuracy and currency of our editorial content, users should independently verify information with their chosen product or service provider. This can be done by reviewing the product landing page information and the terms and conditions associated with the product. If you are uncertain whether a product is suitable, we strongly recommend seeking advice from a regulated independent financial advisor before applying for the products.