There was further evidence of weakening economic trends yesterday, with the latest data on house prices underlining the grim outlook.
The Halifax said house prices fell by 0.9 per cent between October and November – the third fall in the last four months. Prices in the three months to November were down 0.6 per cent compared to the preceding three months. And although the November decline followed an uptick of 1.2 per cent in October, economists said the underlying trend remained soft.
"We suspect that squeezed purchasing power, a markedly weakening labour market and major concerns over the economic outlook will limit potential buyers and weigh down on house prices through to mid-2012 at least," Howard Archer, chief UK economist at IHS Global Insight, said. "On top of that, there still seem to be significant difficulties in getting a mortgage for many people."
But Martin Ellis, housing economist at the Halifax, said he expected the market to remain on an even keel. "Activity has recently shown a few signs of strengthening a little," he said. "We expect the market to remain broadly unchanged in terms of both prices and sales over the coming few months as demand and supply conditions alter little."