Nationwide sees 0.5% house price drop
Posted on 28 December 2007 by
House prices fell by a seasonally-adjusted average of 0.5% across the UK in December, according to the latest figures from Nationwide.
It is the second consecutive month that the building society has recorded a decline, and brings the annual rate of house price inflation down to 4.8%, from 6.9% the previous month.
The building society's chief economist Fionnuala Earley said that although further interest rate cuts would ease the situation for homebuyers, they would now be unlikely to trigger a surge in the housing market, as happened in 2005.
"This is mainly because housing affordability is starting from a much worse position than in 2005, while interest rate cuts have started from a higher and more restrictive level," she said.
"Therefore, this time around lower interest rates are more likely to stabilise market activity rather than re-ignite it."
Yesterday, figures from the British Bankers' Association (BBA) revealed that November had seen the second lowest number of mortgage approvals on record.
At 44,811 approvals, the total was just 500 up on the previous month's record low, and more than 43% down on November 2006.
The BBA's statistics director David Dooks said: "Judging by the significantly lower number of mortgage approvals in October and November – partly resulting from lower demand, partly from tighter supply – the market is likely to continue slowing in the coming months."
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