Halifax reported that houses prices in the UK dropped by 0.5% over the course of February as an effect of the crisis in the eurozone and overall economic uncertainties.When compared to January, house prices fell by about five percent with the value of the average home dropping by 1.9% when compared to the year on year figures.
This means that now the average home on the market costs about £160,000. Halifax added that there are still many ‘significant uncertainties’ that face the market over the coming year that will probably impact house prices for the rest of the year negatively.
Property price prospects depend heavily on what happens in the eurozone and how these events will impact the economy of the UK according to Martin Ellis. The fall in house prices came after there was a slight 0.6% increase in prices during the previous month.
The drop is even worse when compared to a three month measure which showed there was a 1.1% decrease in house prices during February. Ellis added that the house prices resemble spring of 2011 when low interest rates kept housing demand high and thus supply tight.
Also announced this week by Halifax was the news that they would increase their SVR (standard variable mortgage rate) as of May 1st. The interest rate will increase from 3.5% up to 3.99% and Halifax stated that they had to increase the SVR due to the high costs associated with raising mortgage funds from the financial markets and savers.
Nationwide uses different mortgage data and revealed slightly different but close results stating that housing prices in February increased on a monthly basis by 0.6% and on a three month basis by 1.1 which could be due to regional surveying differences.