Halifax says house prices to fall

House prices fell 0.4 per cent in November and are predicted to fall two per cent next year, Halifax has said today.

Since July the average house price has fallen 0.9 per cent, to £159,947 - however this is still 16.8 per cent higher than the average price at the same time last year.

"The housing market continues to slow with an easing in the annual rate of house price inflation from a peak of 22.1 per cent in July to 16.8 per cent in November,” said Martin Ellis, Halifax chief economist.

But the small drop in house prices in November was seen by the bank as more evidence that the property market will not crash.

“Last month's modest fall was smaller than the declines in August and October, suggesting that a measured slowdown may be underway,” said Mr Ellis.

“The fundamentals underpinning the housing market remain sound. In particular, the ongoing strength of the labour market, reflected in rising employment levels, will continue to support housing demand,” he added.

But, a survey by Assertahome.com found house hunters expect house prices to fall by up to nine per cent over the next 12 months.

The research found that prospective buyers expect prices to fall to an average of £141,800 by November 2005, blaming the current high level of property prices and personal debt.

Managing director of Assertahome.com, Jim Buckle, argued: "With expectations for the future of the housing market so weak and the wider economy also showing signs of slowdown, there is no justification for interest rates to remain at 4.75 per cent."

While Halifax believes prices will only fall two per cent, it does see heavy regional variation in house prices next year.

“We expect Scotland (plus three per cent) and Northern Ireland (plus four per cent) to record the biggest price gains whilst the South East (minus five per cent), London (minus four per cent) and the South West (minus four per cent) will experience the most significant price falls.