House price data shows October fall

For sale signsHouse prices edged 0.7% lower month-on-month in October as the weak economy continued to dampen demand, Halifax has said.

The latest decline, which also resulted in a 1.7% drop compared with a year ago, took average house prices to £158,426, the study said.

Halifax housing economist Martin Ellis said the latest figures were evidence that the trend for a "modest deterioration" in house prices was continuing.

He said: "The weak economic background has been a key factor dampening housing demand this year.

"Recent encouraging developments relating to the level of overall economic activity and conditions in the labour market, however, may help to support demand and underpin house prices around current levels over the coming months."

Halifax highlighted recent Bank of England figures which showed a modest increase in the number of mortgage approvals in September to 50,000, although the figures are still below the levels seen a year ago.

Prices in the three months to October were 1.2% lower than the preceding three months, Halifax said, marking the fifth drop in a row for this measure of the underlying trend.

House prices have been dropping on a monthly basis since June, and analysts have said distractions such as the Olympics disrupted the market. Despite the slight uplift in mortgage approvals, they still remain way below the long-term average of around 86,000 approvals a month seen over the last 20 years, experts have said.

Howard Archer, chief UK economist for IHS Global Insight, said house prices are likely to drift lower in the coming months. He pointed to research from property analyst Hometrack which has shown a widening gap as the number of homes coming on the market has increased at a faster rate than the number of potential buyers registering with estate agents.

Dr Archer said: "Certainly, any significant turnaround in house prices still looks some way off... House prices are likely to stay under pressure from persistent limited market activity, still low and fragile consumer confidence, and muted earnings growth."
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