Average UK house price falls 0.4% in January, says Halifax

Average UK house price falls 0.4% in January, says Halifax

	Published : Thu, 09 Feb 2006 13:45 By : Amy Watts Print this Story

LONDON: Average house price in the U.K. fell 0.4 per cent in January, compared to December, according to data compiled by HBOS Plc. unit Halifax. This is the first monthly fall the mortgage lender has recorded since May 2005.

Halifax, however, said compared to the year-ago period, the prices are rising. The annual rate of price inflation is 5.1 per cent during the month, same as in December. The average house price during December had gone up 1 per cent. The market had expected a modest increase of 0.5 per cent in the prices for January.

Halifax's chief economist Martin Ellis said prices have increased by 1.6 per cent over the past three months as the market has strengthened.

The average house price is 170,833 pounds in January compared with 171,362 in December.

The findings run contrary to results of some other surveys carried out recently. Nationwide Building Society had said last week that on a seasonally adjusted basis, house prices had risen 1.4 per cent up from December's 0.5 per cent rise.

Halifax said in 2005 the number of first-time buyers was 10 per cent down on the previous year and 40 per cent down compared to 2002. It was also the lowest since 1980.

It said 85% of towns in the country were now unaffordable for first-timers, who need an average of five years' savings to raise a deposit. The average deposit required for a new homeowner reached 23,967 pounds in 2005, with deposits in London averaging as much as 43,988 pounds. Ten years ago, the average across the country was 5,479 pounds.

Halifax found that number of first time buyers had in fact started moving up in the second half of 2005. It said slowing housing market is an indication that things are going to be easier for potential buyers.

Halifax expected the housing market to be flat in 2006 with modest nominal house price growth and no change in real terms.

Others in the industry believe that a house price crash is on the cards, whether this year or in coming years as they think house prices are over inflated and currently overvalued by as much as 20%.

Another factor is that first time buyers have to save longer before buying or simply cannot afford to buy and get on the property ladder at all; without first time buyers in any numbers kick starting the chain, it is hard to see property values on the increase.