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UK house prices down again

Updated on 08 November 2007

Source PA News

House prices fell for the second month in a row during October, dropping by 0.5%, Britain's biggest mortgage lender has said.

The decline followed a drop of 0.6% in September, and is the first time that prices have fallen for two consecutive months since April and May 2005, Halifax said.

But the group stressed that the falls were a "typical feature" of a more subdued housing market, and were not signs of a wider crash.

It said the market was slowing in response to the five interest rate rises seen since August last year, adding that a sound economy and a shortage in the number of homes for sale would help to support prices.

A similar pattern of house price growth was seen between July 2004 and June 2005, when the cost of property rose during six of the months and fell in six of the months as the market reacted to hikes in the cost of borrowing in 2004.

The latest drop helped to reduce the annual rate of house price inflation to 8.9% for the year to the end of October, its lowest level since October last year and down from 10.7% in September and a peak of 11.4% in August.

Overall, house prices edged ahead by just 0.3% in the three months to the end of October, continuing the slowing trend seen since the end of 2006.

The quarterly growth rate was well down on the 3% increase recorded for the first three months of the year.

October's fall also meant the average cost of a home in the UK again failed to break through the £200,000 barrier, with the average property price now £197,248.

Martin Ellis, Halifax chief economist, said: "The rise in interest rates since August last year and negative real earnings growth so far this year are curbing housing demand, leading to a slowdown in both price growth and activity."

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