Financial Market

The UK property market is continues to experience a cooling down period after prices fell by 0.8% in November according to government figures released recently. These figures were in contrast to Octobers figures were a 0.1% rise in UK house prices was recorded.

The annual rate of house price inflation stood at 9.5% which saw a 1.8% decline on figures from the previous month. Over the three month prior to November figures fell from 11.1% to 10.5%, a more reliable indicator of overall housing price trends.

The decline in figures pushed the average UK house price down from £220,195 in October to £218,330. These average house price figures are based on sale completions and for that reason are behind other house price indexes.

The Nationwide HPI states a third month decline for January of 0.1%, whilst it states house price inflation lies at 4.2% for January 2008.

Whichever HPI is looked at, most property surveys are showing a slowing market as a result of tighter credit conditions and affordability constraints brought on by the global credit crunch.

Research compiled by the Halifax bank and Nationwide building society has showed a weakening of house prices in December in accordance to the government survey. Upon the news many market experts are predicting a flattening market in 2008, with some competitors even predicting prices will fall.

One competitor, Capital Economics, has even predicted gain seen in the housing sector over the last 18 months to effectively be nullified, with a 5% fall in 2008 and 8% fall in 2009.

“Further weakness in the housing market is likely over the coming months,” said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors.

Rates were cut in December and held this month, but many are expecting another rate cut from 5.5% in February. There will also be additional continued strategies throughout 2008 to encourage first time buyers into the market which will help underpin house prices.