House prices slow slightly

The latest report from the Halifax found house prices falling by 0.5% in October, although prices in the three months between August and October were 0.3% higher than in the previous quarter. This research contradicts the Nationwide report for October which found prices rising. However, both lenders agree that the UK economy remains strong as an underpinning to the housing market, and that unemployment is at a record high. Commenting on these results, chief economist at Halifax Martin Ellis said: ?The rise in interest rates since August last year and negative real earnings growth so far this year are curbing housing demand, leading to a slowdown in both price growth and activity.? He also pointed out that the strong position the economy is in, plus the short amount of supply, should continue to ensure the market remains healthy: ?Sound market fundamentals, including high levels of employment and a shortage in the number of properties available for sale, will continue to support house prices,? he said. Brigid O?Leary from Capital Economics said the data looks to be the start of a significant slowdown, but cannot be taken as gospel: ?The fact that house prices have fallen for two consecutive months adds to the impression that the housing market is deteriorating faster than expected. That may be true. We should bear in mind, however, that prices fell for several months during the 2004/05 slowdown and that these falls were subsequently reversed. ?And while other indices such as the Nationwide and Land Registry report house price rises, doubts will remain about whether the Halifax data signal a new trend, or are simply noise,? she added.