Dramatic 2.5% house price decline

Posted 2008-04-7

In its latest monthly house price report, Halifax has revealed that the value of property in the UK has dipped by 2.5 per cent.

That marks the steepest monthly decline since September 1992 and means that the average British home is now worth just 1.1 per cent more than it was a year ago.

With Nationwide also reporting five consecutive monthly dips - and a growing number of commentators downgrading their assessment of the market - the latest report has predictably raised eyebrows.

"Risks are mounting of a substantially sharper drop," warned Howard Archer, chief UK economist at Global Insight. "There is now a very real danger that a drop of more than 20 per cent in house prices could occur over the next couple of years."

That assessment has been backed up by the likes of the International Monetary Fund and Capital Economics, but it is something that housing minister Caroline Flint has dismissed as overly pessimistic.

She told the BBC there are few parallels with the current economic climate and that seen during the housing crash of the 1990s, insisting a more moderate, transient downswing is the most likely outcome.

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