New fall in house prices is possible

17/11/2009

The nation's homeowners could face another downturn in house prices, plunging thousands into negative equity and making it difficult for them to move house or get a new mortgage deal.

According to specialists at MyMortgageDirect, it is "hard to tell" whether or not a recent decline in the value of the typical UK home is "just a blip".

Prices fell sharply with the onset of the credit crunch and recession, but have since staged a minor recovery.

Over the summer of 2009, indices including those from lenders Halifax and Nationwide noted a consistent increase in values.

However, specialist website FindaProperty.com said this week that the typical asking price for homes has fallen by 0.5 per cent this month.

A "double dip" downturn of this kind could have marked effects on the personal finances of thousands of people.

It could also have an effect on the economy as a whole, with people discouraged from moving home by declining house prices and less willing to buy "big ticket" consumer goods on the high street.

Catherine Hearnden, director of MyMortgageDirect said: "I don't think [the FindaProperty.com survey] is particularly relevant news until we get something a little more concrete but I don't think it will do confidence much good.

"I think it is possibly [just] a blip [but] until we see something in the figures [about the] sale prices it is hard to tell."

EuroDebt director Kevin Still commented: "These figures may be seasonal, but there remains concerns that interest rates may rise and household budgets will continue to be squeezed. With news this week that half of employers will be looking at pay freezes in 2010 and inflation rising, it is not a surprise that homeowners are cautious. Many aren't in a position to sell. For many there needs to be a big rise in house prices for them to move into a positive equity position and even look at downsizing."

Tags; Housing Debt and Bills, Young Family Finances, Retirement Money Problems,

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