UK House Prices Fell in June - More Falls Inevitable and Necessary

UK house prices fell by 0.5% in June on average, according to the latest release of the Halifax house price index. The firm also revealed that the fall in the second quarter of this year, was less than in any since the first quarter of last year.

Halifax said that UK house prices rose by an astonishing 2.4% in May, in the same month Nationwide also recorded a strong rise of 1.2%, however Nationwide said this rise continued by 0.9% in June unlike Halifax.

Halifax housing economist Martin Ellis' comments on the house price data were more of the same, he said:

"There was a 0.5% decline in average UK house prices in June. On a quarterly basis, the 1.9% fall in house prices in the second quarter was the smallest since 2008 quarter one. These figures provide evidence that the underlying pace of house price decline is easing.

As were his comments on sales activity...

"There are further indications of a modest improvement in sales activity, albeit at a very low level. Industry-wide figures show that the number of mortgages approved to finance house purchase increased for the fourth successive month in May. Approvals were at their highest level since April 2008 and 10% higher than a year earlier.

"Improvements in affordability and low interest rates have stimulated housing demand. This, together with a low level of properties available for sale, has helped to stabilise activity and reduce the underlying rate of house price decline in recent months."

"Whilst there have been encouraging recent signs of improvement, the outlook for the UK economy remains uncertain with unemployment set to continue rising for some time. Overall, we expect to see a continuing mixed pattern of monthly house price rises and falls over the remainder of 2009."

On the face of it that sounds a pretty balanced and fair outlook, but even at that; the coming 3 ,months could show it up to have been overly optimistic, according to Joseph Harwood, director of Gloucester property investment firm Rock Star.

"This miniature and minor recovery in UK House prices is almost entirely fuelled by the shortage of housing supply on the sales market. No one can deny that there are thousands of properties in the UK being kept off the market because of price falls. If this current positive data should trigger a large number of these people to begin marketing their property and prices will likely go back into freefall," he said.

And that is certainly the worry throughout the industry, having been voiced by major industries bodies including the Royal Institute of Chartered Surveyors. But at the same time you can't have a healthy housing market, or a housing market recovery on the current levels of stock. So, more stock is needed, which will likely cause prices to fall. So you could say that a further reduction in UK house prices is close to inevitable in order for the recovery to begin. And this tracks with recent reports stating that UK houses still are not affordable for first time buyers

By Michael Sutton - 2009-07-08 13:53:25

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Filed under: UK Property, European Property

Tagged: UK House Prices | UK Housing Market | Halifax | Indices |

About the Author: Michael Sutton

Michael Sutton is a staff writer for Write About Property

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Comment By: Mercati

Date: 2009-07-09 20:44:23

Comment:
I don't think forecasting when house prices will decrease or increase is as big an issue as mortgage rates. People want to buy but are holding off at the moment, as the second video on mercati.tv demonstrates. The deals for houses are great but with mortgage rates skies high, no one will buy meaning the market cannot recover. For the last year, 3 houses in a row on my street have been empty, sitting there with no one living in them because no one will buy. Suppose only those who have all the money to purchase a property are the lucky ones in this situation but when lending prices are high, taking out a mortgage is plain stupid.