Another day, and yet another set of figures reminds us of the desperate plight of the UK housing market. Mortgage lender Halifax announced in today’s monthly report that annual price inflation fell to 4.5% in January, from 5.2% in December.
But that’s not the whole story. Over the past three months – a more reliable guide to the present state of the market – prices are down by 1%. And more worryingly, mortgage approvals – which point to the future state of the market – were down 35%.
So Halifax’s forecast for 0% growth in UK house prices in 2008 looks increasingly over-optimistic. Chief economist Martin Ellis claims that ‘sound economic fundamentals and lower interest rates’ will support prices. But this entirely ignores the fact that, even if the Bank of England does slash interest rates again this Thursday, as is widely expected, lenders do not seem keen to pass the cuts on to borrowers. In fact, Halifax itself is just one of the many high street lenders which has actually increased the rate payable on its tracker mortgages. That won’t make it easier for buyers to get on the property ladder – perhaps Mr Ellis should have a word.