House prices down says the Halifax

According to the latest results from the Halifax House Price Index, house prices fell by 2.4 per cent in May and are 3.8 per cent lower on an annual basis. This follows news from the Nationwide last week that their index shows a fall of 2.5 per cent for the month of May.

Commentators have stated that the falls are due to the inability of buyers to be able to secure good mortgage deals, especially first time buyers. However, Martin Ellis, chief economist at Halifax, said price falls should be measured against the significant gains in recent years which have seen house prices grow by over 70 per cent in the last five years.

Whilst the house price indexes of both the Halifax and Nationwide have been good sources of price information in the past, their accuracy is now being questioned. In particular, the data is constructed from their own activities, and as both lenders have recently taken steps to restrict both the type and numbers of mortgage applicants, this may be having an influence on the data. This is a view supported by the Land Registry whose own house price index showed a fall of just 0.2 per cent for the corresponding period. The Land Registry data is taken from all sales, including those which do not involve a mortgage and this would suggest greater accuracy than any lender specific index.

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