Slide in house prices gets worse

The housing market's downward spiral appeared to gather pace yesterday, when Halifax Building Society released figures showing that house prices dropped by a further 0.7 per cent in July.

This monthly drop, the fifth in a row, marks the longest sustained fall for more than two years.

House prices collapsed by 3.1 per cent in the 12 months to July. This compares with a drop of 1.9 per cent in the year to June and 1.4 per cent in the 12 months to May. Average property prices have fallen by almost pounds 2,000 from the pounds 63,563 recorded in July last year.

Just six months ago, the Halifax was optimistically predicting that prices would rise by up to 3 per cent in 1995. As the scale of the crisis began to emerge, the society's forecasts were revised to a flat market for the year as a whole.

Gary Marsh, a manager at the Halifax, bowed to the inevitable yesterday when he said: "The underlying trend in house prices must now be viewed as falling. At very best, house prices will show no change over the year as a whole and could well show a modest fall."

Halifax's figures follow similar ones from Nationwide Building Society on Monday, showing a 1.3 per cent seasonally adjusted fall in the second quarter of 1995, compared with the first three months of the year.

Nationwide also estimated that about 1.5 million households are facing negative equity - their homes are worth less than the mortgages taken out to buy them. These figures contrasted sharply with the Treasury's own estimates of less than 1 million households facing negative equity.

Halifax is beginning to revise downward its assumptions of a 6 per cent rise in prices in 1996. It predicts the housing market will probably remain static or show only marginal improvement.

"I am not a doom-and-gloom merchant, but at this rate the recovery will be so gradual that it will be hardly noticeable," Mr Marsh added.

"All studies on house prices have shown that personal incomes are key to demand for housing. Next year we will either be in a position of no more tax rises, or even of tax cuts, so the market should improve. But it will not improve by that much on its own.

"Our position used to be that there was no need for specific action by the Government and that an upturn in the economy would be enough for a recovery in the housing market. We now feel that is no longer sufficient.

"Without any action to help the market, what we are likely to see is a situation where prices remain virtually flat next year as well."

Mr Marsh said one step the Government could take at once would be to scrap the 1 per cent stamp duty on all property purchases over pounds 60,000.

"We are seeing a gently falling market on the back of an extremely low level of transactions," he said. "Abolishing stamp duty would immediately increase the level of home purchases and give back some confidence to the market."

Start your day with The Independent, sign up for daily news emails
  • Get to the point
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

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before