Falling house prices, growing mortgage costs and dismal property predictions for 2008 continue to dog the house building sector despite a marginal increase in house prices last month.
Concerns over the continuously battered market are being further compounded by news that consumer confidence is on the wane meaning that house builders are likely to suffer as demand for homes decreases.
City analysts have indicated that the reason for the lull is down to other issues, such as concerns over inflation and credit availability, taking precedence over the building of new homes.
Further market analysis has also shown that commercial property values could fall by 16.5 per cent this year, while several companies such as British Land and Land Securities have already noted substantial losses falling by 45 percent and 34 per cent over the past 12 months respectively.
It follows a reversal in the commercial property market's fortunes in the second half of 2007 when years of heady rises came to an abrupt end as the credit crunch hit buyers' ability to raise bank loans.
Research from Property Data, an independent data provider, has also shown that the value of transactions fell from £15 billion in the third quarter of last year to £5.5 billion in the following quarter, a strong contrast to the results announced at the end of 2006.
While figures from Halifax revealed that there was a slight lift in prices of 1.3 per cent last month after three successive months of falls and annual house price inflation saw an easing off of pressure during the last month of 2007 to 5.2 per cent, a dip from November's 6.3 per cent making this the lowest level for two years and only the second year since 2001 that property prices have risen by less than eight per cent anon average.
Martin Ellis, Halifax chief economist, explains: "The housing market continued to slow in the final quarter of 2007 with prices slightly lower than in the preceding quarter.
repayments in response to the series of five interest rate increases between August 2006 and July 2007 and falling real earnings have put pressure on households' income, resulting in a slowdown in both house price growth and activity in recent months."
© Fair Investment Company Ltd