Local government department confirms fall in house prices

Posted under General by Michael

The house price index published by the Communities and Local government department (DCLG) confirmed that house prices in July 2008 were lower by 0.3% than those prevailing in July 2007, in spite of a surprise increase of 1% in prices in July 2008.

The house prices had fallen by 11% last year mainly due to the credit crunch which had choked mortgage fund flow.  The DCLG survey which is based on data of completed sales indicates drop in the prices for the ninth consecutive month. The average UK property price currently stood at £217,171, though the downturn is not uniform across the country.

Prices in England are down by 0.3% while those in Northern Ireland and Wales are respectively down by 10.3% and 0.8%. Scotland though was an exception where prices rose by 3.6% over last year. However surveys by the lenders Nationwide and Halifax pointed out that drop was much steeper in the year to August than reported by the DCLG.

The difference in two reports could be attributed to use of different methodologies by DCLG and the lenders. Lenders price index is computed on the basis of prices quoted at the time of mortgage loans whereas DCLG computation is based on previous months data obtained from 60 mortgage providers for the sale of 50,000 houses.