Combined annual drop in house prices of 10.9% this year

05 September 2008

UK house prices suffer largest fall since records began

According to the Halifax, UK property prices dropped 12.7% between August 2007 and August 2008 – the first double-digit drop since its records began in 1983.

The Halifax said that there was a 1.8% drop in property prices in August, when compared with July, bringing the cost of the average property down to £174,178.

This means the average price of a UK property now falls below the government’s new stamp duty threshold of £175,000.

The lender said that the housing market conditions would still be “challenging” in the coming months, despite the help provided for buyers by the government.

Property prices fell all over the UK; however some surveys have shown the Scottish housing market to be the most durable.

The figures from the Halifax have illustrated that the average UK property price in August 2008 was the same as that seen in February 2006.

Martin Ellis, chief economist at the Halifax, said: “House prices declined by 1.8% in August. 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.

Earlier this week, the government announced that it was temporarily increasing the threshold at which stamp duty is paid from £125,000 to £175,000 as part of measures aimed at helping homeowners and buyers.

“This week’s announcement on stamp duty is a welcome development and will benefit a significant number of homebuyers, particularly outside the south east of England,” Mr Ellis added.

“Market conditions, however, will remain challenging,” he predicted.