House price falls pick up speed

Mortgages and Home

Updated on 26 February 2009 | 0 Comments

House prices declined by 1.8% in February, and further falls look likely.

The decline in the property market is picking up speed. House prices fell at their highest rate for 18 years in February, according to data released today by Nationwide. The monthly fall was 1.8%, and the annual drop was equally steep. Over the last year, the price of the average UK home has fallen 17.6% from £179,000 to £148,000.

Today's survey knocks on the head any suggestion that the housing crash is over. Halifax said earlier this month that house prices had risen in January, but I think it's now clearer than ever that those numbers were a blip.

Some good news

True, there has been some good news today for property investors. Today's bank bailout gives Royal Bank of Scotland at least an extra £13bn to play with, and the bank has promised to lend an additional £9bn to mortgage borrowers this year. That follows last week's news that Northern Rock would start competing in the mortgage market once again.

So it looks like mortgages will become more freely available in 2009, but that doesn't mean we're returning to where we were in 2007.

On the downside

What's more, the rental market still looks weak - and that won't help property prices. Property website, Findaproperty.com, says that the average rent for UK residential property has fallen 4.8% over the last year. The supply of rental properties has risen as would-be sellers decide to rent out their properties rather than sell them at a low price.

And then there's the recession. That's not going to end any time soon, and unemployment looks set to rise much further. This should act as a brake on mortgage lending and house prices for a while yet.

Of course, there's no certainty in any of this and house prices could rise quickly once people are convinced that the crash is over. But when you look at the speed of the price fall in February, I think it's pretty clear we're not at the bottom and house prices will continue to fall in the near future.

So if you're thinking of picking up a property bargain, I don't think there's any need to rush just yet.

More: Falling House Prices Bring Out Potential Buyers

Comments are not gone forever!

We've had to take article comments down temporarily as we set up our new home on lovemoney.com, but new comments tools (and your old comments) will be back soon.

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.