UK House Prices Situation: Prices still falling - down 17% in last year

UK House Prices Forecast: Further falls likely before bottom is reached

Halifax & Nationwide Indexes Show Falls Continue

The latest House Price Indices from Halifax and Nationwide both show almost identical house price trends:

· Halifax: -17.7% in year to February / -2.3% in February
· Nationwide: -17.6% in year to February / -1.8% in February

These results confirm that last month's rise in the Halifax's index was just a blip and that the downward trend of UK house prices is continuing. Further confirmation comes from the Land Registry's latest house price report, which shows that house prices fell by an average of 15.1% in the year to January.

On a more positive note, Halifax notes that the situation is improving for buyers, with the house price to earnings ratio - a useful measure of affordability - falling to 4.42 and getting closer to its long-term average of 4.0. It's down from a peak of 5.84 in July 2007.

Commenting on house price prospects for 2009, Fionnuala Earley of Nationwide said, "Further cuts in rates will be welcome in the housing market, but the economic conditions that require them will mean that there is unlikely to be a swift turnaround in the housing market in 2009."

Rightmove Highlights Sellers' Unrealistic Expectations

While actual sale prices for houses are continuing to fall, it seems that many buyers are unaware of this or are unwilling to accept the reality of the situation.

The latest house price index from property website Rightmove shows that average asking prices rose by 1.2% in February. Although the approach of the traditional spring selling season might be a good reason to place properties on the market, it is hard to understand why people believe that their homes might be worth more than in the previous month - at a time of deepening recession.

As Miles Shipside of Rightmove comments, "Sales are being achieved at around 25% below peak prices, yet new sellers coming to market are starting out asking an average of only 10% less." Shipside went on to say that, "sellers need to set their initial asking price more realistically to get one up on the competition and take advantage of increasing numbers of bargain-hunters".

Read about UK House Price indexes / key statistics that track the ups and downs of house prices

Read our take on the Credit Crisis the effect on UK House Prices and Mortgages. A Special Report

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