New figures from the Halifax showed only a small rise in UK house prices last month after a drop
in February – and the lender said public concerns about household finances and the state of the
economy may lead to further drops in 2011.
The leading mortgage lender said prices rose by just 0.1 per cent in March, after dropping 0.9 per
cent in the previous month. House prices in March were 2.9 per cent lower than a year ago, as
measured by the average for the three months to March against the same period a year earlier –
representing the largest annual decline since October 2009.
Martin Ellis, the Halifax’s housing economist, said: “The recent increase in employment, particularly
those in full-time jobs, may have been an important factor supporting the market. Our forecast
remains for a 2 per cent decrease in house prices in 2011 as a whole.”
He added: “Uncertainty over the general economic outlook and individual financial circumstances
are likely to constrain housing demand, resulting in some modest downward pressure on prices.”
The Halifax House Price Index for March showed the average UK house price was £162,912. Many
analysts agree that house prices will see a fall this year as potential homebuyers are discouraged by
tight lending conditions, high unemployment and limited wage growth.
The current low interest rate environment seems to have done little to allay buyers’ concerns,
despite the Bank of England base rate being held at its lowest level since the central bank was
founded. Most economists expect the Bank to keep rates on hold when they meet tomorrow,
despite inflation soaring to more than double the target rate of 2 per cent.
