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House prices unlikely to change in 2011

House prices unlikely to change in 2011

Category: Mortgages

Updated: 10/01/2011
First Published: 10/01/2011

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House prices dropped by an average of 1.6% during 2010 and are unlikely to change radically during 2011, according to Halifax.

Prices fell by 0.9% in the final three months of the year, although the rate of decline is significantly less than the quarterly falls of between 5% and 6% seen during the second half of 2008.

On a monthly basis, house prices slipped by 1.3% between November and December to leave the average price at £162,435.

Meanwhile, the bank said the low interest rate environment has reduced the burden of servicing mortgage debt.

Its research found that typical mortgage payments for a new borrower have fallen from a peak of 48% of average disposable earnings in mid 2007 to 29% in the last quarter of 2010.

The lender also noted possible signs of stability in housing market activity after the number of mortgages approved to finance house purchases increased in November following six successive monthly falls.

The Bank of England figures showed the number of approvals, at 48,000, was the highest since July on a seasonally adjusted basis.

"Looking forward, we expect limited movement in house prices during 2011 but with the risks on the downside," said Martin Ellis, housing economist.

"Interest rates are likely to remain very low for some time.

"This will continue to support a favourable affordability position for those entering the market and limit financial pressure on existing homeowners to sell.

"Current signs that homeowners are becoming more reluctant to sell would, if continued, help reverse the imbalance between buyers and sellers.

"Nonetheless, uncertainty about the economy, weak earnings growth and higher taxes could put some downward pressure on demand."

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