Feeds/newsletters
House prices down 0.5%
The latest Halifax House Price Index shows house prices down 0.5% in June (i.e. over a month) and down 15% since the same time last year.
Although the trend so far this year looks flatter, the decline in June annualises to a higher rate than the current annual decline — in other words, there are some signs of a flattening, but the data is hard to extrapolate a trend from.
The rate of change has slowed, but prices are still down so far this year, and there does not seem to be much momentum behind last month’s rise. Although low interest rates relieve the pressure on most people paying mortgages, it is important to remember that low inflation means that the burden is not inflated away after a few years, as in the past.
The house price to earnings ratio has fallen to 4.33, from over 5 an year ago. This implies further falls to reach the long term average of around 3.5, and if the recession continues we could see the much lower levels reached in previous recessions (below three). The report itself differs from our view, but, then again, what else would one expect a mortgage lender to say?
It is it true that houses are more affordable, and most people are better able to afford payments, the great threat to house prices lies in unemployment, and those concentrated groups of people whose incomes have been severely adversely affected — especially those whose big bonuses in previous years have often been pumped into property.
We need user contribution, so please suggest stories/links
Comments