The latest Halifax House Price Index shows prices in February were 2.8% lower than a year ago as measured by the average for the three months to February against the same period a year earlier. This is the biggest annual decline since October 2009.
The decline in properties coming onto the market continues. The latest RICS survey showed a reduction in new seller instructions for the fourth successive month in January. This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices.
Commenting, Martin Ellis, housing economist, said:
"House prices, as measured by the underlying trend, continue to fall slightly with prices in the three months to February 0.4% lower than in the previous three months.
"There has, however, been little change in house prices over the first two months of 2011 as a whole. February’s monthly decline of 0.9% offset January’s 0.8% gain.
"Overall, we expect a modest 2% decrease in house prices in 2011. Uncertainty over the economic outlook is likely to weigh down on housing demand this year.
"Fewer properties have been coming onto the market in recent months. This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices."
Jonathan Moore, director of Easyroommate.co.uk said:
“A drop in house prices is nothing but good news for potential first-time buyers. But we need to see a sustained fall before the situation noticeably eases for would-be buyers. Unaffordably high house prices are being compounded by unrealistic demands for enormous deposits by lenders. No wonder homeownership is now falling in Britain, and young people are preparing for lifelong renting – by necessity rather than choice. In London, where young people flock to find work, the average cost of renting a room in a flatshare is already £641 per month. Without an improvement in mortgage availability to get first-time buyers into their own homes, the rental market will continue to feel the pressure of increased demand and rent will continue to rise.”
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