House prices tumble 3.6% in record drop
House prices slipped 3.6% in September sparking fears of a sustained period of decline in the market, according to Halifax.
This is the biggest monthly drop recorded by Halifax since it started its index in 1983.
Disappointing results from last month have been blamed on a dent in house buyers’ confidence, but Halifax says it is too soon to conclude if these results are the beginning of a long-term fall in prices.
Halifax says the rate of quarterly change is a better measure for evaluating market trends. The rate of decline has been significantly slower - 0.9% lower in the third quarter than in the second quarter of 2010 - than the changes seen in the second half of 2008, when prices dropped by up to 6%.
Last year a shortage of properties for sale contributed to an imbalance between supply and demand and was one of the key factors in driving up prices. An increase in properties for sale recently, combined with fears over economic uncertainly, has dampened the market.
Martin Ellis, housing economist for Halifax, says these factors have exerted downward pressure on prices recently and explains that differences between various house price indices reflects the difficulty of getting a clear reading on the current state of the housing market.
He also notes that with low interest rates, set to stay low for some time, there is likely to be a long-term improved level of affordability for homeowners.
"Prospects for the market remain uncertain, earnings growth is expected to be very modest, tax rises are on the way and more people are putting their homes on the market." he adds.