The Inside Edge
Earlier this month, the Nationwide revealed figures that claimed a small drop in house prices for January 2012 in comparison with the previous month. Overall, the society suggested that average prices had fallen by 0.9% over the period but those findings are at odds with the latest set of figures produced by the Halifax.
From December 2011 to January 2012 the Halifax suggest that the average cost of a home in Great Britain actually rose by 0.6% to £160,907. The reasons behind these findings lay with low interest rates although they still represent a fall of 1.6% compared with the same period in 2011.
These statistics will be a positive sign for economists who had predicted a gloomy opening to the year. Martin Ellis of the Halifax welcomed the findings while warning that any future figures would be subject to the economy’s ability to withstand all the various problems that it currently faces.
“Low rates have contributed to mortgage payments falling to their lowest level as a proportion of disposable earnings for a new borrower for 14 years. A recent improvement in employment trends may also have supported demand,” Mr Ellis said.
“Prospects for house prices over the coming months will, to a large extent, depend on events in the eurozone and the repercussions of developments there for the UK economy. If the UK can avoid a prolonged recession, we expect broad stability in house prices in 2012,” he added.
Welcome though the figures may be, they still contradict not only the Nationwide’s findings, but additional statistics released by the LSL/Acadametrics house price index which suggest a fall of 0.2% from December 2011 to January 2012 with an annual rate of decline of 1.4%.
LSL Property services who supplied the figures also suggested that the fall was sharper than expected.
“Prices edged down in January, dropping further than the normal seasonal slowdown we expect to see in the first month of the year,” said David Brown, Commercial Director at LSL.
“This means prices are now falling at 1.4% on an annual basis – the fastest rate of decline since September 2011. This has been driven by growing concerns among property buyers about the state of the global economy – especially the extent to which the eurozone crisis will slow the market.”
Confusing though these figures may be, the Halifax are sticking by an overall prediction that will see prices drop considerably for the whole of 2012. This forecast was backed up by Howard Archer, Chief Economist at IHS Global Insight.
“We are sticking to our view that house prices are likely to fall by around 5pc in 2012,” he said. The latest Halifax data, along our belief that the economy will likely just avoid recession, suggests that house prices are unlikely to fall sharply,” Mr Archer concluded.