UK house prices fell more than forecast in September
Thu 04 Oct 2012
LONDON (SHARECAST) - UK house prices fell by 0.4 per cent month-on-month in September, to 159,486 pounds, for a 1.2 per cent decrease versus a year ago, according to the latest data out this morning from mortgage lender Halifax.
The consensus estimate had been for a rise of 0.1%.
Prices in the three months to September were 1.2% lower than in the same period a
year earlier. This measure of the annual rate has moved outside the narrow range of 0% to -1% for the first time in seven months.
That as, "the generally weak economic climate remains a significant constraint on housing demand,” Halifax explains.
Compensating in part for the above, the relatively low level of mortgage payments in relation to income continues to provide support for house prices. Mortgage payments for a new borrower remain significantly below the long-term average as a proportion of disposable earnings. Typical mortgage payments for a new borrower - both first-time buyers and home-movers – at the long-term average loan to value ratio, have nearly halved as a proportion of disposable earnings from a peak of 48% in 2007 Quarter 3 to 26% in the third quarter of 2012. This is significantly below the average of 36% recorded over the past 27 years.
In a similar vein, economists at Barclays Research argue that: “we would point out that these price declines have been relatively measured and the house price index in September was very similar to what we saw at the end of last year.”
As an aside, home sales have been very stable in recent months, at between 75,000 and 77,000 between May and August. Overall, sales in the three months to August were 3% higher than in the same period last year.
Lastly, commenting on the data Barclays Research adds that: “Over the past two years house prices have mostly zig-zagged, as the weakness in the economic outlook and declining real household incomes have been balanced to some extent by the accommodative monetary policy and restricted housing supply. We see the squeeze on household incomes easing in the medium term and the BoE’s Funding for Lending Scheme providing some modest support to prices. As a result, we expect house prices to be flat in the next few months before starting a gradual recovery in 2013.”
LONDON (SHARECAST) - UK house prices fell by 0.4 per cent month-on-month in September, to 159,486 pounds, for a 1.2 per cent decrease versus a year ago, according to the latest data out this morning from mortgage lender Halifax.
