House prices continue to drop, reaching all time low

House prices are falling at an alarming rate according to the UK's largest lender Halifax. The mortgage lender's latest property index has seen a 12.7% fall in the past year, the highest rate since records began in 1983. They also reported a 1.8% fall last month, following a 1.7% fall in July, making it the sixth month in a row to report a fall of over 1.5%.

This is good news for first time buyers, who have no ties to any other properties, but has caused the property market to go on hold, as prices are still unstable and mortgage lenders have tightened their standards.

According to Halifax the average price of a property is around £175,000. In August alone that figure would have fallen by over £3000, bringing the average property in the UK below the government's recently raised £175k stamp duty threshold.

These drops in figures are being repeated across all rival lenders. For example Nationwide reported a 10.5% drop over the past 12 months.

Halifax chief economist Martin Ellis, said: "The pressure on householders' income, together with the reduction in the availability of mortgage finance due to the global financial markets crisis, is resulting in both lower property prices and activity levels. This week's announcement on stamp duty is a welcome development and will benefit a significant number of homebuyers, particularly outside the South East of England. Market conditions, however, will remain challenging,"

This constant dive in house prices has put potential homebuyers off, and is making it hard for people to make sales on their houses, causing a vicious circle. The recent raise of the stamp duty threshold has been welcomed by lenders and buyers, but experts say that the lack of mortgages available will continue to reduce demand.

Author: WHICH4U WHICH4U