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House prices fall 0.1% but hopes rise

Peter Cripps,Pa
Thursday 09 December 2010 09:52 GMT

House prices fell by 0.1% in November but there are hopes the market may be stabilising, Halifax said today.

Property prices in the three months to November were 0.7% lower than a year earlier, which was their first annual decline since November 2009.

However, Halifax said there were signs homeowners were becoming more reluctant to put properties on the market, which would help slow the recent quarterly falls in house prices.

The month-on-month decline in November took the average house price to £164,708 and followed a record 3.7% fall in September and a 1.8% increase in October.

Halifax said the varied monthly pattern is consistent with a relatively flat underlying trend for house prices.

The quarter-on-quarter figures are generally seen as smoother indicator of the market because they strip out some of the monthly fluctuations.

Prices in the three months to November were 2.1% lower than the preceding three months.

Last month, Halifax reported that prices showed a 1.2% quarter-on-quarter decline, the biggest fall since June 2009.

But Halifax pointed out that the quarterly declines were well below the declines of 5% to 6% in the second half of 2008.

It does not expect to see a significant fall in prices and believes interest rates will remain low for an extended period, which will help mortgage availability.

There has been great volatility in the housing market in recent months as a smaller-than-normal number of properties for sale leads to big monthly fluctuations in prices.

Today's month-on-month price fall was less than expected, with the market pencilling in a 0.5% drop during November.

The news boosted listed housebuilders this morning, with shares in Taylor Wimpey, Bellway and Redrow up as much as 6%.

The Halifax data added to the latest report out today from the National Association of Estate Agents (NAEA), which suggested demand for property increased for the first time in four months during November.

The average estate agency branch had 241 house-hunters on its books during the month, up from 218 in October.

The NAEA said the rise in demand was not matched by an increase in sellers, with the number of people putting their home up for sale dropping for the second consecutive month, leaving the average branch with 64 properties.

But Howard Archer, chief economist at IHS Global Insight, said he still expected house prices to show double-digit falls from their 2010 peaks by the end of 2011.

"The housing market really does not seem to have got much going for it at the moment," he said.

He said house prices would be kept under pressure by "a poor combination of factors for house prices", including public sector job cuts, low consumer confidence following spending cuts, difficulties in getting a mortgage and low wage inflation.

He predicts average house prices will fall a further 7.5% to £152,536 in 2011.

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