Halifax, now part of Lloyds Banking Group and the country’s largest motgage lender, said yesterday in its closely watched index that the value of the average property fell to £162,096 from £168,124 in August.
Halifax’s chief economist Martin Ellis, said it was “too early” to say that September’s decline in house prices was the beginning of a renewed collapse in overall market arguing low transaction levels were contributing to increased volatility in the monthly house price measure.
Ellis stressed that while September’s 3.6 per cent fall – the biggest reported in 27 years – was a record on the basis of monthly comparisons, on a quarterly basis the fall in house prices was 0.9 per cent compared with the second quarter – a significant slowdown on previous quarter-on-quarter falls of between five and six per cent.
Ellis said: “A shortage of properties for sale contributed to an imbalance between supply and demand and was a key factor driving up house prices last year. An increase in the number of properties available for sale in recent months has reduced the imbalance. At the same time, renewed uncertainty about the economy and jobs has caused consumer confidence to falter recently, dampening the demand for home purchase.”
Alan Clark, chief economist at BNP Paribas, painted a more pessimistic picture warning it was almost inevitable that house prices would fall into negative territory again.
He said: “To give you the glass half full version we are a small island nation and we do not have enough homes in the right areas. But we are also going to see massive spending cuts in the next few weeks, people losing their jobs or worried about doing so and that is going to restrict spending.”
He added it was “entirely possible” house prices would remain static for up to a decade.
On Wednesday the IMF warned that UK?house prices were too high and vulnerable to a fall.