House prices in the UK fell in March, but at a slower pace compared to February, a report from Lloyds Banking Group Plc's Halifax division showed Friday.
The report showed that the Halifax house price index slipped 1.9% in March, slower than a 2.3% decline in February. Economists expected house prices to fall only 1.8%. The standardized average prices stood at GBP 157,326 in March, lower than GBP 160,390 in February.
House prices were 17.5% lower on an annual basis in March. The annual rate of change measured by the average for the latest three months against the same period a year earlier improved slightly from 17.7% decline in February.
In the first quarter, house prices dropped 2.7%, after falling 5-6% in each of the previous three quarters.
Conditions in the housing market are likely to be tough during the remainder of 2009 despite the improvements in affordability. Commenting on the house price data, Martin Ellis, Economist said, Increasing unemployment, low consumer confidence and the constraining effects of the continuing dislocation of the financial markets on the availability of mortgage finance are all likely to exert downward pressure on the market over the coming months.
In March, the house price to earnings ratio, a key affordability measure, dropped to a six-year low of 4.34 in March from a peak of 5.84 in July 2007. In February, the ratio stood at 4.43%. At the same time, the mortgage debt servicing cost for all borrowers eased in recent months.
In February, monthly repayments accounted for 22.6% of gross household income compared with the peak 26.9% in October 2008, making the latest proportion the lowest since September 2005. The average mortgage rate also decreased to 4.10% in February from 5.82% in October last year.
According to Land Registry, the number of completed sales in England and Wales fell by 50% between 2007 and 2008 to 618,151. Despite this, the Halifax said there were tentative signs of stabilization in activity, although at a very low level.
On the contrary, a report by Nationwide yesterday revealed that house prices in the UK rose by an unexpected 0.9% in March, reversing the 1.9% fall in February, and ending the long streak of uninterrupted decline that started in October 2007. Economists were looking for another 1.5% decrease in March. The Nationwide report also showed that house purchase activity reached the highest level since May 2008.
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