House price slip to continue - Halifax

Brittle consumer confidence, falling incomes in real terms and - often - stupid asking prices could see house prices held back for several more years, claim a rash of experts.

Values have dipped by almost -2% in the last year claims the Halifax, and the downward trend looks set to continue. New buyer affordability, on the other hand, is starting to edge up - finally.%VIRTUAL-SkimlinksPromo%

Price falls to continue

The latest Halifax index has seen British house price values slip -1.7% overall in the last year. "This was the fifth successive decline in this measure of the underlying trend and compared with a 0.5% fall in September," says the lender.

There's hope for those wanting to make the property ladder leap: the Halifax price/earnings ratio dipped from 4.42 in October 2011 to 4.22 in October 2012. In real terms, that means house-buying 'affordability' has increased +4.5%, if the Halifax numbers are accurate (which sees this trend constant and continuing - see Halifax chart below, right hand side). So cheaper monthly mortgage payments.

But affordability is still problematic. If you can't afford to buy a property when Bank of England interest rates remain stuck at 0.5% - and lots of people have no hope, given that the average national wage hovers at about the 23k mark - then there's something very odd or unreal about the British property market.

More realism?

Gráinne Gilmore, head of UK residential research at Knight Frank, quoted in the Telegraph, is clearly uneasy: "Some five years after the start of the financial crisis, the housing sector in the UK still does not bear the hallmarks of a fully functioning market." Gilmore expects prices to slip a further -1% in the next 12 months.

It's even predicted that average UK house prices won't hit the highs hit of 2007 until 2031, once the effects of inflation are stripped out. So, a bleak prognosis for current home owners. And some encouragement, at last, for would-be home buyers (provided they avoid much of the London and the South East). Bring on the slump. It's about time.

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