British house prices look set for a "double dip" even if the economy as a whole avoids it - with a total real-terms depreciation in property values of close to a third since the peak of 2007.
The news comes despite evidence of a lift in activity. Spring is traditionally
busier and the cold winter may have added to this seasonal bounceback.
The latest Halifax house price index shows that average prices fell by 1.4 per cent, taking the overall drop in house values from their peak in 2007 to about 20 per cent, and the annual decline to 3.7 per cent. The average house price of £160,395 ($331,871) remains 20 per cent below its August 2007 peak of £199,612.
Adding inflation the real-terms fall in house prices since 2007 has been closer to 30 per cent - with a further 5 to 7 per cent fall forecast. Interest rates too may tighten, depressing activity and values. Though many analysts only expect the Bank of England to raise the rate by 0.25 percentage points the effect on would-be buyers may be greater if they become convinced that this turning point presages a return to pre-crisis interest rates - and higher mortgage bills.
- INDEPENDENT
