House prices see sharp decline

House prices fell by 2.5% in March, the biggest monthly decline since September 1992, according to a survey from the Halifax. The latest monthly figure from the UK s largest mortgage lender was significantly worse than analysts predictions of an average 0.4% drop. During the first three months of the year, the Halifax reports prices decreased by 1.1% to a UK average of £191,556. The data from the Halifax is the latest sign that the UK housing market is under pressure. On a positive note, analysts believe that the weaker than expected figures could mean the Bank of England will cut interest rates by at least 25 basis points to 5% on Thursday. Also, the decline in prices should be viewed in the context of the significant price rises over recent years, says the Halifax s chief economist Martin Ellis. I am surprised that we have seen a fall of quite this extent, but of course we have been seeing some falls in previous months. So, it is not surprising there s actually been a decline during the month, he adds. Ellis and other analysts say we are witnessing an adjustment in the housing market. There has been a decline in housing demand and as a result we have seen a pattern of monthly falls appearing over the last six or seven months, Mr Ellis suggests. Peter Bolton King from the National Association of Estate Agents (NAEA) is calling on the Bank of England to stabilise the housing market. People are losing confidence because they are unable to secure mortgages especially first-time buyers, who are also scared off by the feeling of instability. There remain strong economic factors in the country like high employment but confidence is a huge issue and only a significant move will restore that confidence and convince lenders and public alike. The Bank of England needs to take action fast and reduce interest rates. However, it is imperative the lenders do likewise.