House prices are continuing to fall, although the new year has seen a moderation in the rate of decline, according to the latest data from the online estate agency Rightmove.
Having recorded a sharp decline of 3.2 per cent in values in December, partly caused by a glut of properties rushed on to the market to beat the Home Improvement Pack (HIP) dead-line, UK real estate values declined by an average of only 0.8 per cent in January, the group said. The annual rate of increase now stands at 3.4 per cent, its lowest since December 2005.
January's data represents the third consecutive monthly fall recorded by Rightmove, though the company is upbeat about prospects for the future. "There is clear evidence of a marked increase in both activity and average prices immediately after the new year," it said. "Some homebuyers are now able to find properties that have fallen into their affordability zone."
The Rightmove figures are broadly in line with trends recorded recently by the Nationwide Building Society and the Halifax bank. However, the more forward-looking surveys of the market conducted by the Royal Institution of Chartered Surveyors (Rics) suggest a more gloomy prospect. Last week, the Rics reported that its members were more pessimistic than at any time since the housing slump of the early 1990s, when high interest rates, unemployment, fall-ing values and record repossessions all but destroyed confidence in the market.
Mortgage approval levels also fell to a three-year low in November. The credit squeeze is continuing to make its presence felt, as less credit-worthy borrowers find it harder to find finance, pushing down demand.
Rightmove says much now depends on how fast the Bank of England is able to cut interest rates. The Bank's England's Monetary Policy Committee voted unanimously to cut interest rates from 5.75 per cent to 5.5 per cent at its December meeting. Most observ-ers expect a further cut at the next MPC meeting on 7 February, although rising inflationary pressures may lead to a slower pace of rate cuts in the future.