UK house prices have dropped for a second month, reaching their lowest annual rate of growth since July 2006, according to Hometrack.
The property website has said that house prices fell by 0.2 per cent in November, after October's 0.1 per cent decline - the first fall in two years – which has caused the annual rate of growth to slide from 4.4 per cent in October to 3.6 per cent this month.
Following the credit crunch over the summer months, the UK as a whole has experienced a tightening in many sectors, not least property, signalling an end to the period of growth and favourable market conditions enjoyed in London and the South East during the first half of 2007.
Since July, buyer registrations in Central London and City area have dropped by 0.5 per cent while south-west London fell by 0.4 per cent.
Richard Donnell, Director of Research at Hometrack comments: "Continuing media focus on the fall out from the credit squeeze, along with relatively high interest rates is resulting in widespread caution among homeowners, the majority of whom do not need to move and who are sitting back until the outlook becomes clearer.
"As a result the Christmas slowdown looks to have started early but the underlying market conditions remain weak with new buyer registrations down by 26 per cent over the last 5 months," he adds.
With economists pre-empting a cut in interest rates within the next month, Hometrack has suggested that this may be the catalyst for any short-term turnaround in market confidence, if any. Yet some experts have stated that homeowners shouldn't expect to see a cut until at least February 2008.
However, according to Halifax's latest House Price Index, while mortgage approvals to fund house purchases fell by 6 per cent in September and approvals in the third quarter of 2007 were 11 per cent lower than the same period in 2006, there is some positive news.
Martin Ellis, Chief Economist, explains: "House prices fell by 0.5 per cent in October. Prices in the three months to October were 0.3 per cent higher than in the previous quarter – a good guide to the underlying trend - continuing the steady easing in house price growth since the end of 2006.
"The rise in interest rates since August last year and negative real earnings growth so far this year are curbing housing demand, leading to a slowdown in both price growth and activity. The UK economy is in a strong position. Sound market fundamentals, including high levels of employment and a shortage in the number of properties available for sale, will continue to support house prices."
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