Fears that Britain is braced for a house price crash were raised yesterday by another set of gloomy figures from Halifax.
The lender said a stand-off between reluctant sellers and nervous buyers was threatening stagnation for the housing market for the rest of the year.
Its latest figures showed average house prices in the UK fell 0.6 per cent to £161,094 during July and remained completely becalmed over the past quarter.
Some economists fear that worse is to come, with British house prices still sharply over-valued compared with the US.
Some estimates suggest they would need to fall by between 40 and 60 per cent to bring them into line, a nightmare scenario for lenders whose customers would face being locked into negative equity for years to come.
Dean Baker, the influential US economist, has pointed out that American wages are significantly higher than in the UK. He has branded prices here as "unsustainable" even after recent falls and warned that anything from a small increase in interest rates to a pick-up in supply could trigger a collapse.
Others are less pessimistic, although IHS Global Insight economist Howard Archer said house prices had further to fall this year. "The Halifax data heighten our suspicion that house prices are headed lower over the rest of 2012 and very possibly beyond in the face of limited activity, low and fragile consumer confidence, muted earnings growth and relatively high unemployment," he said. "We expect house prices to end up losing at least 3 per cent from current levels."
But Philip Shaw, the chief UK economist at Investec, said prices were still relatively affordable.Reuse content