Halifax, the UK’s largest mortgage lender, has reported that house prices witnessed an annual fall of 0.9% in April, taking the average value of a house down to £189,027. The bank added that it expects a ‘mid-single-digit’ percentage decrease in 2008. However the decline will not be the same across the UK, with some areas being worst affected.  Wales and the West Midlands are likely to be the most badly affected whilst Scotland is expected to buck the trend and actually see an increase. (more…)

Kate Barker, a member of the Bank of England’s Monetary Policy Committee, warned that the greatest pressures on the economy stemmed from falling housing prices and a reduction in mortgage approvals. Adding that the Bank could not stop the impact of these pressures in the short term.

 There is a concern that the credit crunch goes deeper than the BoE predicts, leading to the realisation of these concerns but would send some households into negative equity. If this were to happen, people’s willingness to spend would diminish leading to a slowdown across the economy.

The Bank must surely now act quickly and cutt interest rates again in March to head off such outcomes as best as possible.

The housing market continues to weaken, with the average house price in December falling to £184,469 from £186,009 in December. In fact only three regions in England and Wales showed an increase, the largest being 2.2% in the North East.

A report from the Land Registry is the latest report to confirm the weakening. It shows that annual prices fell by 0.4% in December bringing the annual growth rate down to 6.7% from 8.1% in November. This news is supported by date from the two largest mortgage lenders, the Halifax and the Nationwide, who report annual growth of 5.2% and 4.8% respectively.

Coupled with the fact that mortgage approvals are at a three year low, there is growing pressure on the Bank of England to cut interest rates in February. Lower prices and interest rates should mean canny investors coul pick up a bargain or two in the coming months.