Halifax reports 10.9% drop in house prices

Halifax has reported a 1.8% fall in house prices from July to August 2008, taking the average house price down to £174,000, a fall of 10.9% from last year.

It says that house prices have now returned to February 2006 levels.

The lender’s house price index says that while the market will remain challenging this week’s government plan to stimulate the housing market should encourage people to buy property.

It emphasizes that the year long Stamp Duty holiday should reduce the burden felt by many homebuyers, especially outside the south east of England.

Halifax says nearly a quarter of a million homebuyers in England and Wales would not have paid stamp duty over the past year if the threshold had been at the same level.

Martin Ellis, chief economist at Halifax, says: “House prices declined by 1.8% in August. A solid labour market, low interest rates and a shortage of new houses continue to support the market.

“The pressure on householders’ income, together with the reduction in the availability of mortgage finance due to the global financial markets crisis, is resulting in both lower property prices and activity levels.”