House prices fall for second month
The house market continues to “tread water”, the Halifax said today, after prices fell for the second month in a row in August.
The average house price was £160,256 last month, which was 0.4% lower than the previous month, cancelling out two previous rises as prices drift back to the level seen at the end of 2011.
Halifax housing economist Martin Ellis said easing inflation should boost spending power and support house prices in the coming months, but added that the market was expected to remain flat heading into 2013.
Today's survey is at odds with a recent report by the Nationwide which showed that house prices rose 1.3% in August - their biggest monthly rebound in more than two-and-a-half years - although they remained 0.7% lower than a year ago.
House price data has been volatile in recent months amid low volumes as banks rein in mortgage lending.
Barclays analyst Blerina Uruci said that while monthly data had been volatile, a better underlying picture was painted by comparing prices over the past three months with the previous quarter.
The Halifax data for this measure have now fallen for the 11th month in a row, she said.
While the economy is set to remain weak for the rest of the year, analysts say prices may be underpinned by a shortage of supply of new homes for sale, particularly if employment data remain strong.
And there are hopes that the Treasury and the Bank of England's new £80 billion Funding for Lending scheme, which aims to encourage banks to lend more, will help boost the market in coming months.
Analysts have so far seen little evidence that the scheme has done much to increase the availability of mortgages for people with lower deposits and first-time buyers.
But recent Bank of England figures showed that mortgage approvals increased slightly in July compared with an 18-month low recorded in June, providing hope of an improvement to come.
Ms Uruci said: "We expect house prices to be marginally lower in 2012 compared with last year as the weakness in demand is likely to be offset by tight housing supply and support coming from the Funding for Lending Scheme."
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