Commenting on the Halifax House Price Index, Suren Thiru, economist, said:

 ”House prices fell by 1.7% in July. Pressure on householders’ income, together with a very significant reduction in mortgage finance due to the global financial markets crisis, is constraining potential house buyers’ ability to enter the market. This is resulting in both lower prices and activity levels.

A solid labour market, low interest rates and a shortage of new houses continue to support the market. The labour market is the key driver of the housing market and the number of people in employment is at a record high.”

Halifax - UK House prices JULY 2008 (seasonally adjusted)

• Annual change -8.8%
• Monthly change -1.7%
• Average Price £177,351

Key facts

• House prices fell by 1.7% in July. This was smaller than the falls in both the previous two months – May (-2.5%) and June (-1.9%).
• The UK average price is more than one-third higher (34%) than five years ago. The average price in July 2008, at £177,351, was £44,980 higher than in July 2003 when the average price was £132,371.
• House prices in July were 8.8% lower on an annual basis. UK average prices have returned to the level they were at in June 2006.
• The housing market is underpinned by a solid employment market and low interest rates. Our research shows that the labour market is the key driver of the housing market. The number of people in employment increased by 61,000 over the three months to May compared with the previous quarter and by 413,000 over the past year to a record 29.59 million.
• The average mortgage rate paid by all borrowers - i.e. the average rate on outstanding mortgage loans - fell by 21 basis points during the first half of 2008 from 5.97% in December 2007 to 5.76% in June 2008. This fall occurred despite a rise in the average mortgage rate paid by new borrowers in recent months. (Source: Bank of England)

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