House prices fall in August but outlook stable

7th Sep 2011 10:15

UK house prices fell by 1.2% in August compared with the previous month but will hold steady over the coming months, according to the Halifax.The drop in August was the first fall since April and came off the back of three successive monthly rises, the lender said.But the less volatile quarterly measure showed that prices rose by 1% in the three months to the end of August compared with the previous quarter.Martin Ellis, Halifax's housing economist, said a recent decline in average mortgage rates had boosted home affordability for those able to raise a deposit."Low interest rates are likely to continue to support the market whilst increased uncertainty about the economic outlook and pressures on householders' finances constrain demand," he said. "Overall, we expect broad stability in both prices and activity over the coming months."The lender said that the average home was 2.6% lower in value than a year ago at an average of £161,743.Blerina Uruci at Barclays Capital said the figures were in line with a Nationwide survey released last week, which also showed house prices fell significantly in August. "On the upside, Halifax reported that lower mortgage rates have helped to increase mortgage affordability," she said. Halifax said mortgage rates has fallen more than 2% since mid 2007, meaning typical mortgage payments for a new borrower had fallen to 28% of average disposable earnings in July 2011.This is down from a peak of 48% in mid 2007 and the long-run average of 37%.