House prices record worst monthly fall ever

The UK's fragile economic recovery was exposed by Halifax's influential house price survey yesterday, which revealed the largest monthly fall in property values on record.

The respected index showed that house prices dropped by 3.6 per cent last month, becoming the latest in a line of economic indicators that have suggested that confidence is weak ahead of the Comprehensive Spending Review in two weeks' time. The review is likely to lead to extensive cuts to public spending and the loss of thousands of public sector jobs.

The Government says the cuts are vital to maintain the confidence of the markets, to assuage fears that the UK could face a sovereign debt crisis, and keep its much-vaunted triple-A credit rating.

Halifax downplayed the significance of the monthly fall, saying that the three-month average is a more reliable indicator. The bank, which is now part of the Lloyds Banking Group, reported that, in three months to September, prices fell by 0.9 per cent.

"Looking at quarterly figures – a better measure of the underlying trend, house prices in the third quarter of 2010 were 0.9 per cent lower than in the second quarter of 2010," said Halifax's chief economist Martin Ellis.

"This rate of decline is significantly slower than the quarterly changes of between minus 5 per cent and minus 6 per cent that were seen in the second half of 2008. It is therefore far too early to conclude that September's monthly 3.6 per cent fall is the beginning of a sustained period of declining house prices."

The average price of a house in the UK is now £162,096, a 2.6 per cent increase on the level a year ago. Howard Archer, the chief economist at IHS Global Insight, described the headline monthly fall as an "absolute shocker" but agreed that volatile nature of monthly changes made them unreliable. "The Halifax data highlights how volatile housing market data can be on a month-to-month basis and from survey to survey, so it is best not to attach too much importance to one piece of data. It is clear that the 3.6 per cent plunge in house prices reported by the Halifax in September is partly a correction to the surprising rises reported in August and July which conflicted with other data and surveys," he said.

Nonetheless, the fall in prices will reignite concerns that the housing market is set to reverse. The Halifax figures came a day after the International Monetary Fund (IMF) described the outlook for the UK's property market as "worrisome". In its World Economic Outlook, published ahead of this weekend's meeting in Washington, the IMF said: "What remains worrisome ... is that house prices are still high based on traditional valuation yardsticks, and policy support may not be enough to prevent further correction."

The IMF's concerns about a double dip in the housing market were not shared by Simon Rubinsohn, the chief economist at the Royal Institution of Chartered Surveyors (Rics), who yesterday said that while house prices are likely to continue to slide, the chances of a severe decline are slim.

"Rics expects prices to slip a little further over the coming months, but despite the prospect of public spending cuts we believe the risk of large house price falls remains relatively limited," he said. "Key Rics lead indicators measuring the gap between demand and supply suggest the gap is already beginning to narrow which points to a more stable picture emerging for the early part of 2011."

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine