Halifax says house prices down but stabilising

House prices fell by 16.2% on an annual basis in December and by 2.2% from the previous month, according to Halifax. The UK average price has returned to the level in August 2004 of £159,799.

Martin Ellis, chief economist, said: "There was a 2.2% decline in average UK house prices in December. Continuing pressures on incomes and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to exert further downward pressure on the market over the coming months. 

But a number of factors will help to support demand and should help to limit the downturn. Improving housing affordability and an easing in the pressure on the majority of households' finances should support market activity and prices. The house price to earnings ratio – a key affordability measure - is at its lowest for five and a half years."

House prices nationally declined by 5.2% in Quarter 4.  This was similar to the decreases recorded in the two previous quarters (-5.6% in Quarter 3 and -5.1% in Quarter 2), suggesting that the underlying rate of decline may be stabilising.

Housing market activity shows signs of stabilising albeit at a low level. The number of mortgages approved to finance house purchase was broadly unchanged for the fourth successive month in October at a seasonally adjusted 32,000.  Estate agents reported the first increase in newly agreed sales for 18 months in November and the first rise in new buyer enquiries since October 2006.  (Sources: Bank of England and RICS).