House prices fell by a further 2.3% in February, offsetting the 2% increase seen in January, Halifax’s latest property price index has revealed.
The latest monthly fall means house prices are now 17.7% lower than the same month last year. The average price has returned close to £159,799, a level last seen in August 2004.
However, Halifax says there are some tentative signs of stabilisation in the housing market. For a start, falling house prices have improved affordability to its best level for six years. And although there are no signs that banks are starting to lend more, Halifax says that fact that mortgage lending levels are stable suggest things are, at the very least, not getting worse.
Martin Ellis, housing economist at Halifax, says: “While market activity remains at very low levels, there are some tentative signs that activity may be beginning to stabilise."
David Smith, senior partner at Dreweatt Neate estate agents, says we are now nearing the point where buyer and seller expectations converge.
"While transaction levels overall remain low and mortgage finance is still difficult to secure at higher loan-to-values, we are seeing increased traction in the market and firmly believe that now and the next six months are the trough for house prices," he adds.
But Ellis is less positive: "However, continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are likely to mean that 2009 will be another difficult year for the housing market."