House prices fall for first time in 4 years

Inflation to blame, says the Halifax

A SQUEEZE on household incomes has helped trigger the first quarterly fall in house prices for more than four years.

average prices fell by 0.2 per cent to £219,649 in the three months to april compared with the previous quarter.

it marks the first quarterly fall since November 2012, according to the halifax house price index. Prices are more than £2,500 below their peak of £222,190 in december, providing fresh evidence that the property boom has ended.

The annual rate of house price inflation remained at 3.8 per cent in april, the lowest rate for four years, while the average property fell 0.1 per cent in april.

halifax, Britain’s biggest lender, said yesterday that house prices have stagnated and there are signs that rising inflation is putting pressure on household incomes.

after the surge in house prices in recent years, this has pushed buying a home further out of reach for many.

its housing economist, martin ellis, said: ‘ housing demand appears to have been curbed in recent months due to a deterioration in housing affordability driven by the sustained period of rapid house price growth during 2014-2016.

‘Signs of a decline in the pace of job creation and the beginnings of a squeeze on household finances as a result of increasing inflation may also be constraining demand for homes.’

The Bank of england is expected to warn later this week that household incomes will come under severe pressure this year as wages fail to keep pace with inflation.

Barclaycard says consumer spending grew 5.5 per cent in april as inflation drives up the

‘A cost of living crisis’

cost of everyday essentials. inflation is currently 2.3 per cent, the highest in more than two and a half years.

Some economists have warned that households face a cost of living crisis, with inflation expected soon to outpace wage growth. The Bank of england revealed last week that the number of mortgage approvals being made to home buyers fell to a six-month low in march.

But warnings from pro-Brussels cheerleaders that a Brexit vote would trigger a collapse in the housing market continue to prove wide of the mark.

halifax yesterday said confidence in the housing market has stabilised following a record decline last October in the wake of the eU referendum.

it pointed to figures from hm revenue and Customs which show the number of sales in the first three months of the year is closely in line with the average between 2014 and 2016, when house prices surged. The lender also suggested that house prices would continue to be propped up by a shortage of homes and record low interest rates.

The halifax is offering £1,000 to attract new mortgage customers. The cash, paid on completion, is open to first time buyers and home movers lodging an application by July 2.

rivals have slashed mortgage rates to as little as 0.89 per cent, but cashback rather than further cuts could become more common in the battle for borrowers.