UK house prices book record monthly fall in Sept

LONDON: British house prices plunged a record 3.6% on the month in September, mortgage lender Halifax said on Thursday, Oct 7 in a further sign the housing market is rapidly losing steam after a pick-up last year.

Analysts were cautious about reading too much into one month's data but noted that recent mortgage approvals data had also pointed to a weakening market and that fragile economic conditions meant the outlook was bleak.

However, the figures did little to alter the view the Bank of England will leave interest rates steady at 0.5% and the stock of its quantitative easing purchases on hold at 200 billion pounds when its monthly meeting concludes at 1100 GMT.

Halifax said September's fall was the biggest since records began in 1983 and left house prices up 2.6% in the three months compared with a year ago, the weakest rate December.

In August, Halifax said house prices rose 0.4% on the month, for a three-month annual rate of 4.6%.

Analysts said September's surprisingly weak reading could just be a blip, especially as rival mortgage lender Nationwide reported last week that house prices rose 0.1% last month.

"While the September house price drop highly likely overstates the weakness of the housing market, there seems little doubt that the housing market is now in reverse," said Howard Archer, economist at IHS Global Insight.

"Rather than crash, we expect house prices to trend down relatively gradually over the final months of 2010 and in 2011 to lose around 10% in value."

Halifax economist Martin Ellis said it was too early to tell whether September's decline marked the start of a steep downward trend in prices.

He said the quarterly figures provided a better picture of the underlying trend, showing house prices were 0.9% down in the three months to September compared with the second quarter of this year.

"This rate of decline is significantly slower than the quarterly changes of between 5% and 6% that were seen in the second half of 2008," Ellis said.

"It is therefore far too early to conclude that September's monthly fall is the beginning of a sustained period of declining house prices." — Reuters