Nationwide figures have been strengthened in the last month, as released by the Halifax Price Index for May- which indicated a fall in house prices. According to Halifax, house prices fell by 2.4 per cent in May, just 0.1 per cent less than the monthly figure from Nationwide.
The Halifax data also shows that house prices are now 3.8 per cent less than this time last year. However, the bank is keen to stress that these price drops should be measured against the significant price increases in recent years.
According to the study, house prices rose by a massive 79 per cent between 2002 and 2007, an average increase of £88,000 per house. The Halifax put the decline down to the difficulties currently being felt by potential home buyers who are finding it harder to get a mortgage as a result of the credit crisis.
Chief economist at Halifax, Martin Ellis said: “The decline in prices is caused by the difficulties created for potential house purchasers by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability. These factors have curbed housing demand.”
Meanwhile, as the credit crunch takes hold and households feel the pinch, repossession is becoming a serious threat for some. As the cost of living rises, along with mortgage rates, the Council of Mortgage Lenders (CML) is gearing up for a rise in repossessions.
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