House prices fell 0.4% in November, says Halifax

The latest Halifax price index for November has revealed that house prices fell by 0.4% in November.

It also says over the past year, house prices have increased by 16.8%, and houses prices have fallen by 0.9% since July.

Last month’s modest fall was smaller than the declines in August and October, suggesting that a measured slowdown may be underway.

Other housing market indicators continue to show a moderation in activity since mid-year.

The number of loans approved for house purchase fell for the fifth successive month in October, to a seasonally adjusted 83,000.

New buyer enquiries fell for the sixth successive month, says RICS, but there are signs of an easing in the downward trend with the decline in October being the smallest since the downturn began in May.

The number of people in employment rose by a further 55,000 between July and September, says the latest ONS figures.

The high levels of employment, which Halifax research shows to be the key driver of the housing market historically, will support housing demand.

In a separate release, issued today, we predict that house prices in the UK will fall by 2% in 2005.

This slight fall follows nine years of rising house prices when the average home has increased in value by almost 100,000, a 160% increase.

Beyond 2005, we expect the market to record modest price increases; affordability will also improve, especially for first-time buyers, who will return to the market in larger numbers than in recent years.

Martin Ellis, chief economist at Halifax, says: “The housing market continues to slow with an easing in the annual rate of house price inflation from a peak of 22.1% in July to 16.8% in November.

“Overall, house prices have fallen by 0.9% since July and by 0.4% over the past quarter.

“Last month’s modest fall was smaller than the declines in August and October, suggesting that a measured slowdown may be underway.

“The slowdown in house price growth and activity during the past few months shows that the Bank of England’s interest rate rises are successfully curbing housing demand.

“The fundamentals underpinning the housing market remain sound. In particular, the ongoing strength of the labour market, reflected in rising employment levels, will continue to support housing demand.”

Other housing market indicators continue to show a moderation in activity since mid-year. For example, the number of loans approved for house purchase fell for the fifth successive month in October, to a seasonally adjusted 83,000.

Accordingly, activity has fallen from the very high levels during the period from early 2002 to mid-2004 to levels that are similar to the late 1990s.

The latest RICS survey shows a 10% rise in the stock of unsold properties on estate agents’ books between July and October, but the stock is only slightly higher than a year ago.

New buyer enquiries fell for the sixth successive month, but there are signs of an easing in the downward trend with the decline in October being the smallest since the downturn began in May.

Affordability constraints have sharply reduced the number of first-time buyers over the past few years.

First-time buyers, however, accounted for the highest proportion of all new mortgages since April 2003 in October, at an estimated 32%. Despite this rise, the proportion remains well below the longer-term average of 44%.

The ongoing strength of the UK economy, the latest official estimates show that annual gross domestic product in the third quarter was 3.1%: comfortably above the long-term average growth rate of 2.5%, is reflected in the labour market.

The number of people in employment rose by a further 55,000 between July and September, says the latest ONS figures. The high levels of employment will continue to support housing demand.