House Price Update 20/10/10

UK House Prices Situation: Prices down in September

UK House Prices Forecast: Real increases unlikely, falls possible in some regions

Prices Down 3.6% In September

Average house prices fell by 3.6% in September, according to new figures published by mortgage lender the Halifax. This brings the annual rate of change over the last year to just 2.6%. Halifax housing economist Martin Ellis said that "it was far too early to conclude that September's monthly 3.6% fall" was the beginning of another house price crash but that "an increase in the number of properties available for sale" had combined with "renewed uncertainty about the economy" to put "some downward pressure on prices in recent months."

Ellis also commented that "low transaction levels across the market" were causing monthly figures to be quite volatile – meaning that they do not necessarily provide an accurate reading of the current state of the housing market.

The Halifax report also highlighted the improvement in housing affordability compared to the years of the housing boom – in mid-2007, mortgage payments for a new borrower accounted for an average of 48% of disposable income. Today, that figure is just 30%; below the long-term average of 37% over the last 25 years. This improvement is largely due to low mortgage interest rates and is likely to be reversed when rates rise to more typical levels in the coming years.

Rightmove Sees Asking Prices Up 3.1% In October

The latest house price index from property listings website Rightmove has found that asking prices rose by 3.1% in the month to 9th October. This seemingly inexplicable rise – given that sales prices seem to be falling – is apparently a "normal characteristic of the autumn selling season" – asking prices have risen in October every year for the past decade.

Despite this, there seems little chance that this increase in asking prices will result in a corresponding increase in sale prices. However, would-be sellers who think that they can start high and gradually reduce their asking price could be making a mistake. Rightmove's Commercial Director Miles Shipside says that "if a newly-marketed property fails to initially impress and find a buyer then it can quickly go stale and get written off even though its price may subsequently be substantially reduced."

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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