On an annual basis, prices are now 0.6% lower than one year ago – following two months of positive annual house price inflation which had seemed to confirm the recovery.
With the market traditionally slowing towards year end, this price stall could mark the start of the "double dip" downturn that commentators have been fearing.
More expensive properties for home movers, which had been performing more strongly than entry level properties over the past year, saw an above average decline of almost £3000 or 1% since last month. First-time buyer homes, in contrast, fell by just £304 or 0.2% month-on-month – in cash terms, a tenth of the decline for home mover properties.
First-time buyer affordability improved slightly this month on the back of lower prices. Typical first time buyers now need to find £57,400 by way of deposit once they have secured their maximum mortgage, down from £58,030 last month. This will make relatively little difference to most borrowers, however, equating to 1.81 times annual gross household income, compared with 1.80 last month.
Michael O’Flynn, director of FindaProperty.com, said: "After seven months of sustained rises in house prices, we now see quite a sharp decline – with a thousand pounds slashed off the value of the average home. It is also likely that the market will soften as the traditional quieter year end approaches, so further falls over the next couple of months are not to be discounted.
"We knew the recovery would be bumpy, but it remains to be seen whether we will slide into a double dip housing recession 2010. With demand high and confidence improved, much will depend on how lenders respond. They’ve benefited from £200billion in quantitative easing underwritten by the taxpayer and they need to do more to help underpin the recent market recovery."
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