The latest house price index from Halifax shows values fell 1.8% in August, bringing the prices to more than 10% lower than where they were last year.
The latest monthly fall is around the same level as the two previous months – June suffering 1.9% falls and July 1.7% - but is lower than those seen in March (2.5%) and May (2.5%). Despite the apparent slowdown in house price falls since the spring, Halifax says market conditions remain challenging with mortgage lending still restricted and consumer confidence low.
However, it is hoped that the government’s new stamp duty exemption for properties less than £175,000 will give the market something of a boost. Following the move on Tuesday 2 September, property website Rightmove reported a 10% increase in traffic.
Properties valued at less than £175,000 are believed to make up 41% of the market nationwide and 63% in the North. However, in London they only make up 11% of the total market.
Martin Ellis, chief economist at Halifax, says although a “significant” number of borrowers will benefit from the stamp duty exemption, it will not be enough to rescue the housing market.
And he adds: “A solid labour market, low interest rates and a shortage of new houses continue to support the market. The pressure on householders' income, together with the reduction in the availability of mortgage finance due to the global financial markets crisis, is resulting in both lower property prices and activity levels.”
Ellis calculates that nearly a quarter of a million homebuyers across England and Wales would have been spared having to pay stamp duty over the past year if the threshold had been £175,000 rather than £125,000.
However, with a wide variety of house prices across the UK, those living in certain regions are less likely to benefit from others (see table below).
Philip Hammond, the Conservative Party shadow chief secretary to the Treasury, says continuing house price falls indicate why the government's rescue plan will not work.
“Last month’s house price fall completely wipes out any benefit to would-be homeowners from the government’s stamp duty holiday," he says. "This is more evidence that this is a short-term political rescue package for Gordon Brown rather than a long-term plan to revive Britain’s ailing economy.”
| % of all properties by stamp duty thresholds |
|Yorkshire and |
|South East||9%||30%||34%||7% |
| Source: Land Registry and Halifax |
Total for Q3 2007 to Q2 2008