Halifax says house prices fall confirms slowdown in market

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The Independent Online

House prices fell by 0.4 per cent in June for the second consecutive month, Halifax, the largest mortgage lender, said yesterday.

House prices fell by 0.4 per cent in June for the second consecutive month, Halifax, the largest mortgage lender, said yesterday.

The fall takes the annual rate of house price inflation to 9.2 per cent from 11.2 per cent in May, the first time it has been below 10 per cent since September last year. Halifax said it was further evidence that the housing market was slowing down.

The figures will come as relief to the members of the Bank of England's monetary policy committee, who will announce their decision on interest rates at noon today. They are expected to leave the Bank's base rate at 6 per cent.

Halifax said: "Last month's modest decline in house prices provides further evidence that the housing market is slowing down. Annual inflation is now well below the 16 per cent peak attained in January." It said the four rises in interest rates between September and February and the abolition of mortgage tax relief in the Budget were the main factors behind the slowdown. It added that prices in greater London - the engine room of the recent boom - had risen to such heights that many potential buyers had been priced out of the market, so cutting demand.

"The easing in the pace of the housing market is consistent with recent signs of reduced growth in consumer spending and retail sales, suggesting that household demand is less buoyant than a few months ago," Halifax said.

But the bank said there was little risk of a slump in the market as houses were no less affordable now than the average since 1984, when its affordability index began. "This should support a relatively robust housing market over the remainder of the year," it said.

The picture is, however, still clouded as Nationwide, the largest building society, reported this week that prices actually rose 0.4 per cent last month. But it stressed that the annual rate of inflation had fallen and it believed the market was slowing.

Four out of 10 housebuyers arrive at their new properties to find the previous occupants have taken the light bulbs with them, according to a survey by HouseWeb.com, an online estate agent.

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