Halifax and Nationwide are at odds over the state of the UK housing market…

According to Nationwide, house prices fell again in December, signaling a second consecutive monthly decline. Overall prices fell by 0.5%, a 0.3% difference from November. The average price of a UK property is £8,334 higher than a year ago. The worldwide credit crunch is clearly taking hold - rate cuts will help but are unlikely to re-ignite the housing market as in 2005

Commenting on the figures Fionnuala Earley, Nationwide's Chief Economist, said: “UK house prices fell by a seasonally adjusted 0.5% in December, recording their second consecutive month-on-month fall. The annual rate of house price inflation fell to 4.8%, compared to 6.9% in November and 10.5% in December 2006.

“The average price of a UK property rose by £8,334 over the last 12 months, leaving it at £182,080 at the end of 2007. The three-month on three-month rate of growth – a smoother indicator of house price trends – fell from 1.4% in November to 0.9% in December, the lowest since November 2005.“

Nationwide figures are in marked contrast to Halifax, whose House price index indicated that prices increased by 1.3% in December following three successive monthly falls.

According to the Bank, Prices in the fourth quarter were marginally lower than in Quarter 3, down -0.8%.  House prices in December were 5.2% higher than a year earlier with the average price of a home in the UK increasing by £11,759 over the year to £197,039. 

Subdued market

Halifax’s Chief Economist Martin Ellis commented:  "House prices increased by 1.3 per cent in December, reversing some of the declines recorded in the preceding three months.  This mixed pattern of monthly price rises and falls is a typical characteristic of a subdued market.

“Overall, the housing market continued to slow in the final quarter of 2007 with prices slightly lower than in the preceding quarter. Higher mortgage repayments in response to the series of five interest rate increases between August 2006 and July 2007 and falling real earnings have put pressure on households' income, resulting in a slowdown in both house price growth and activity in recent months.

“Sound economic fundamentals and lower interest rates will support house prices in 2008. The UK economy is expected to deliver its 65th successive quarter of GDP growth during the year, extending the longest running period of unbroken growth on record.  The MPC is likely to follow up last month's cut by reducing the Bank Rate at least twice in 2008.  House prices are predicted to be flat during 2008."