COMMENT: House prices now falling in real terms (From Worcester News)

COMMENT: House prices now falling in real terms

8:04am Wednesday 9th April 2008 in

• Skip social links
• Print
• Email
•  

THERE was even more bad economic news last night as the nation's biggest mortgage lender revealed house prices in March had shown their biggest monthly fall for almost 16 years.

The second largest monthly drop ever saw the average cost of a home fall by 2.5 per cent, according to the Halifax, as the credit crunch continues to escalate.

The latest figures also showed annual house price growth has slowed to just 1.1 per cent. That's the lowest level for 12 years and means property prices are now falling in real terms on an annual basis.

Add in house prices in the West Midlands falling by five per cent in the first quarter of this year - 3.7 per cent lower than they were a year ago - and it all makes for pretty gloomy reading. We in the media, however, must be careful not to talk up a recession.

Times are undoubtedly tougher than they have been for several years. But we are still light years away from the economic misery of the early Nineties.

The data released yesterday was gloomy stuff but we should not place too much emphasis on one set of figures. The majority of homeowners still have properties that are worth substantially more than they were when they bought them.

What is worrying is the mass re-pricing of the mortgage market by lenders and suggestions from some analysts that house price falls in excess of 20 per cent are on the horizon. It is clearly a time for belt-tightening but there is still every chance of riding out this particular economic storm.