House prices in the UK plunged 15% in the year to October, Halifax said yesterday, as tighter lending continued to deter first-time buyers. Britain's biggest lender said prices fell 2.2% last month and warned conditions 'remain challenging'.
Would-be buyers welcomed yesterday's decision by the Bank of England to cut its base rate from 4.5% to 3%. However, analysts believe this will not help first-time buyers, which means prices are likely to fall much further.
Seema Shah, property economist at Capital Economics, said: 'Lender criteria are not loosening at all. Lenders are not passing on rate cuts to new buyers.' Lending had become much riskier as Britain's economic outlook continued to deteriorate. Capital predicted house prices will have fallen 35% by the end of next year.
Many economists believe it will take at least a decade for prices to regain record 2007 levels with Andrew Clare, professor of asset management at Cass business school, saying it would take until 2023.
The Guardian
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