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House prices in sharp fall

Published:: 29 November 2007
Topic:: News,Money,Mortgages

UK house prices saw their biggest fall in 12 years during November, a survey says today.

Nationwide Building Society's monthly data shows the cost of an average home fell by 0.8% from a month earlier. This is the first price drop since February 2006.

The fall last month means annual rate of house price inflation now stands at 6.9%, down from 9.7% reported in October.

Nationwide's figures echo those of another mortgage lender, Halifax, which recently reported price falls in both September and October.

Yesterday, Land Registry's figures, which include all sales and not just those on mortgaged properties, showed a 0.6% drop in the market last month.

Nationwide chief economist Fionnuala Earley says the data "confirms that the housing market is indeed cooling.

"Poor affordability, weaker house price growth expectations and the effect of earlier increases in interest rates have all affected demand in the market."

Nationwide's 0.8% price drop in November is the biggest single monthly fall reported by the building society since June 1995. Last week the British Bankers Association said mortgage lending by its members was significantly down. 'Mortgage Lending Slumps', 23 Nov

However Ms Earley says an outright collapse in the property market is unlikely:

"With interest rates on the way down and the continued issue of undersupply of housing in the UK market, the underlying fundamentals are perhaps more positive than the recent swings in sentiment might suggest," she said.