House prices down 3.9 per cent on June

Julian Harris
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HOUSE prices fell by another 0.3 per cent in November, mortgage-lender Nationwide announced yesterday.

The news follows an even sharper drop in the previous month, as prices fell 0.7 per cent on September.

Prices have either fallen or stagnated since June, according to Nationwide’s statistics.

The average house price in the UK is now £163,398, whereas in June houses were averaging over £170,000, more than 3.9 per cent higher.

The announcement echoes recent gloomy news for the housing market from other sources.

On Monday the Bank of England declared that mortgage approvals sank to an eight month low in October, totalling just 47,185.

And that afternoon the Office for Budget Responsibility (OBR) forecast a 3.1 per fall in prices for the coming year, despite predicting strong economic growth and a rise in employment.

But these factors are unlikely to make much difference to the housing slump, according to Howard Archer of IHS Global Insight.

Low real wages and continuing difficulties in securing mortgages (particularly for first time buyers) are likely to maintain the housing markets woes, he said.

And this is despite low interest rates and the stamp duty holiday for first time buyers.

“House prices will lose around 10 per cent of their value from peak 2010 levels by the end of 2011,” he said.

“This would see average house prices fall to £153,100 as house prices have another 6 per cent to fall.”

The pessimistic outlook is not equally spread throughout the UK. “London continues to outperform the rest of the country, and should be seen as a separate market in its own right,” said Peter Rollings of estate agent Marsh & Parsons.

Demand from foreign buyers and cash buyers is circumventing the credit problems in the UK mortgage lending sector, he said.

“And with bonus season on the way, we anticipate many City workers taking advantage of the increased choice of properties on the market,” he added.