Over 2011 there were six monthly house price falls, five increases and one month of unchanged prices confirming property price growth ended up flatlining in 2011.
Martin Ellis, Halifax housing economist, said: “House prices in the final quarter of 2011 were 0.1% lower than in the previous quarter. This compared with a 0.1% rise from April to June and July to September.”
However he said prices “held up well” in the face of the difficult and deteriorating economic climate and substantial pressure on households’ finances.
“If the UK can avoid recession, we expect broad stability in house prices in 2012. There is, however, considerable uncertainty regarding the prospects for the UK economy which will, to a large extent, depend on how events in the Eurozone unfold,” he said.
He added that if households continue to pay down debt, this will also affect growth contributing to the uncertain outlook for house prices.
Howard Archer chief UK and European economist, Global Insight was more bearish pointing out the December figures took UK prices to their lowest since July 2009.
“Furthermore, this marked the fourth drop in house prices in five months on the Halifax measure,” he said.
Although the Halifax figures are lower than other indices, Archer said this confirms his expectation prices will head down in the coming months and 5% overall by the end of 2012.
“We suspect that low wage growth, a markedly weakening labour market and major concerns over the economic outlook will limit potential buyers and weigh down on house prices,” he said.
“Indeed, there is a growing likelihood that banks’ willingness to lend to prospective home buyers will diminish due to the weak economic environment while there is also the very serious risk that banks’ future ability to lend could be increasingly constrained by difficult wholesale funding conditions. These factors are seen outweighing the support to house prices coming from extended very low interest rates.”
