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Halifax: September house prices fall 3.6%; Too early to call double dip
September house prices growth tumbled sharply in September, according to the Halifax, but the housing shortage last year may be distorting the picture so calling a property double-dip could be hasty.
Martin Ellis, Halifax housing economist, said the quarterly figures show a drop of 0.9% from Q2 to Q3, but growth is contracting far more slowly than the second half of 2008.
“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. It is therefore far too early to conclude that September’s monthly 3.6% fall is the beginning of a sustained period of declining house prices,” he said.
According to the Halifax house price index, the shortage of properties for sale contributed the imbalance between supply and demand and was the key factor driving up house prices last year, said Ellis. The increasing numbers of homes for sale took the heat of the market as the imbalance corrected.
Consumer confidence has also taken a tumble dampening down the demand for home purchase.
All these factors have pushed prices down in recent months and volatility has also risen making house prices harder to call.
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“Prospects for the housing market remain uncertain. Earnings growth is expected to be very modest over the next year, tax rises are on the way and more people are putting their homes on the market. These will all be constraints, dampening house prices,” said Ellis.
“On the positive side, we expect interest rates to remain very low for some time, which will underpin the improved affordability position for homeowners,” he said.
David Smith, the senior partner at property consultancy, Carter Jonas,said: “We have offices all over the country and have seen nothing to suggest that prices fell by 3.6% during September.
“The sensational September statistic will cause significant concern but it is not consistent with what is happening in the real market. The quarterly rate of change, at -0.9%, is a far more accurate reflection of market conditions.
He added the concern is that statistics like this will further dent consumer confidence.
“Martin Ellis hits the nail on the head when he talks of the difficulty of securing a clear reading. With so many negative and positive variables in the mix at present, it is almost impossible to predict activity within the property market from one month to the next,” said Smith.