There is no doubt the credit crunch is affecting confidence in the mortgage market and consequently the housing market, but it is important to remember that many of the figures hitting the headlines are national averages. Regionally the difference in house prices is considerable and experts believe that some areas may even see an improvement in prices during the course of 2008.

Both Halifax and Nationwide have released figures this week citing an average drop in house prices across the UK. According to the Halifax Price Index , house prices fell by 1.3% in April, with the average house now costing £189,027. Nationwide reported  a 1% fall in house prices. It says the average house now costs £178,555, £1,759 lower than at this time last year.

But says Martin Ellis, Chief Economist Halifax: Price falls should be viewed in the context of the substantial price rises over recent years."  UK prices nearly trebled (190%) over the ten years to August 2007 and the average UK price rose by more than £130,000 between August 1997 and August 2007.

Ellis adds: “Some areas of the country are likely to record modest price rises whilst other parts are expected to see falls above the national average (Wales and West Midlands).”

Peter Bolton King, Chief Executive of the National Association of Estate Agents (NAEA) agrees: "Whilst the (Halifax) report shows a modest decline in prices, this is a small proportion of the substantial prices in recent years.  And the picture is still regional with some areas holding up better than others.  In fact, the report shows that Scotland is going to show a modest rise this year.  This is in line with recent research that shows that the Scottish market could grow 1% in 2008.” 

Regional Variations in The UK’s Housing Market

Source: Halifax