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House prices fall again but signs point to buyer return
Hugo Duncan26 Feb 2009
The slump in house prices accelerated this month, dashing hopes that the decline was coming to an end.
Mortgage lender Nationwide said average house prices fell 1.8% in February from £150,501 to £147,746.
It was a steeper decline than the 1.3% seen in January and left house prices down a record 17.6% — or almost £32,000 — on a year ago.
However, experts said interest among potential buyers is rising as they look to take advantage of lower mortgages and falling prices.
The Bank of England has cut interest rates aggressively to an all-time low of 1% and the average tracker mortgage is now almost £240 cheaper than it was a year ago. In London, the saving is almost £380 a month.
Fionnuala Earley, chief economist at Nationwide, said: “Sharp cuts in interest rates have helped affordability, but have not yet affected housing market confidence sufficiently to boost the levels of new transaction activity or slow the pace of house price falls.
“Signs of increased interest in housing, as reported by the pick-up in new buyer enquiries, have yet to filter into sales, but do suggest that falling prices and interest rates are raising curiosity now, which could flow through quickly once confidence returns.
“Further cuts in rates will be welcome in the housing market, but the economic conditions that require them mean there is unlikely to be a swift turnaround in 2009.”
Howard Archer of Global Insight said: “This reinforces our belief that house prices still have substantially further to drop. We are sceptical that sales will pick up substantially any time soon.”
Reader views (4)
I agree with Stephanie - I have been to numerous estate agents in the last few weeks doing what most people would refer to as 'window shopping' or even the sport of 'get the estate agent worked up and then walk away' gag (goodness knows they deserve it after all the poor service we had to endure during the boom years)- but I will not be buying as prices still have another 20% to fall at least. But that shouldn't stop us from having some fun with the bottom feeders of the estate agency world.
- Jeff, Essex, 26/02/2009 21:01
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I urge people to take headlines like this with a huge pinch ot salt.Buyers think the overpriced rubbish on the market is a bargain because someone is taking off 20k,it wont be such a great deal when interest rates go back to where they need to naturally be,Gordon Brown will do anything to stay in power and buying now will just be taking on someone elses debt.This took ten years to inflate and it will take the same to recover.This is not the housing blip of 2005.
- Emma, london, 26/02/2009 18:18
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Whats wrong with everyone, its only a house why has everyone gone mad these past few years borrowing more and more money to make a debt for themselves and money in the pocket of the estate agents. Estate agents won't allow prices to drop even with the situation as it is now its way too much to ask for a house which is more often then not just a heap of junk when you look at it. How can house prices go down when members of government themselves have borrowed and borrowed to buy more and more property to line there pockets too. It's all a rip off and I am sick of the lies and corruption of people in general. You can't take it with you and you will surely be judged one day for all the pain that greed has done. Just live and stop trying to make a quick buck, work for it instead. House prices have to be affordable and they are not, you are just going to borrow more and more with interest rates low. Crazy, just crazy who will learn anything about this?
- Martha, london, 26/02/2009 17:07
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It is inaccurate to talk about a possible recovery in the housing marker simply because more enquiries are being made. At this time of year many people will see what is for sale and to rent - it does not mean they are going to make a commitment.
- Stephanie Williams, London, 26/02/2009 10:39
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