It is the second successive monthly fall in prices according to the Halifax index, but is in contrast to the Nationwide index which found that prices increased 1.3% in August and the Land Registry which recorded a 0.8% increase in July.
The Halifax says that there has been little overall change in prices over the first eight months of 2012. The average UK house price in August 2012 was 0.2% higher than in December 2011. House prices nationally are at a very similar level to three years' ago, at £160,256.
Prices in the three months to August were 0.9% lower than in the same period a year earlier. This measure of the annual rate has been between 0% and -1% throughout the last six months. The annual rate has improved compared with a year ago when prices were falling by 2.6% in August 2011.
A gradual upward trend in spending power, aided by lower inflation, should help to support housing demand in the coming months but house prices are likely to remain flat over the remainder of 2012 and into next year, according to Halifax housing economist Martin Ellis.
‘Nationally, house prices continue to tread water, as measured by the underlying trend. Overall, there has been little change in house prices so far this year with the UK average price in August at a very similar level to the end of 2011,’ he explained.
He added that even though inflation has been falling in recent months, notwithstanding the slight pick up in July, weak income growth has prevented that from leading to a significant improvement in consumers' spending power.
‘However, if inflation falls further over the next year, as we expect, spending power should be on a gradual upward trend. This is likely to support housing demand and, therefore, house prices,’ he said.
Nick Hopkinson, director of PPR Estates, said that the housing market is not going to improve much until there is an increase in lending. ‘The credit crunch of 2008 remains wholly unresolved with mortgages only really available to those who don’t need the money. Mortgage costs for anyone brave enough to take out a loan are typically closer to 5% rather than the 0.5% official rate which effectively nullifies the benefits of the Bank of England’s low rate policy for most consumer borrowers,’ he said.
‘Real inflation at street level remains stubbornly higher than all official forecasts would like it to be and is continuously squeezing household incomes. The unemployment data is heavily flattered by an increasing number of part time workers who are earning less than they need for a decent living. Even the Coalition Government seems paralysed by indecision and procrastination announcing yet another three year enquiry into Heathrow’s expansion plans while our international competitors continue to take travel business off London,’ he explained.
‘In fact, without the Prime London bubble which is fuelled by foreign billionaires and has no real relevance to 99% of UK property buyers, the house price stats would be much worse. When you look beyond the highly volatile and statistically meaningless monthly data produced by the vested interests at the big lenders, it seems very likely that further house price falls across most of the UK are inevitable over the coming months,’ he added.
