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House prices in the UK fell by their biggest amount in 25 years over the last 12 months - and economists predict that they have much further to fall.
Halifax, Britain's biggest lender, said that prices dropped 2.6% in November and 16.1% over the last 12 months, to leave the average price of a house falling just over £30,000 to £163,605. This is worse than the early 1990s, when the country was last in recession, and is the biggest fall since 1983. Howard Archer at IHS Global Insight said: "The latest Halifax house price data are a real shocker, even by the recent very low standards of the housing market."
Would-be buyers are currently unable to get on the property ladder as it is so difficult to obtain a mortgage. Housing experts are doubtful that yesterday's one percentage point cut in interest rates will help boost the housing market.
Liam Bailey, head of residential research at Knight Frank, said: "This cut is unlikely to have any immediate effect on the housing market, although it may tempt some buyers to make a decision. Prices will continue to fall into 2009. Much depends on whether the new rate is passed on to borrowers."
Simon Ward, chief economist at New Star, the fund management group, predicted earlier this week that house prices might not return to their August 2007 peak until the mid-2020s. The Liberal Democrat Treasury spokesman, Lord Oakeshott, said: "The Halifax house price index is at last catching up with what property professionals have known and auction prices have been shouting since the spring: there is a market, but in a mortgage famine houses only sell at the levels cash buyers are prepared to pay."
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