January 2, 2009

Home prices in Britain fall to 2004 levels

Home values in Britain declined 2.2 percent in December, completing a year in which average home prices fell to levels of August 2004.

Halifax bank, which has tracked home prices since 1983, said 2008 price drops were the sharpest on record with the average price in December reaching $230,490, The Daily Telegraph reported Friday.

Continuing pressure on incomes and the negative impact of the dislocation of the financial markets "¦ are expected to exert further downward pressure on the market, Halifax Chief Economist Martin Ellis said.

The market could improve, he said.

With prices falling, the house price-to-earnings ratio -- a key affordability measure -- is at its lowest for five and a half years, Ellis said.

In spite of the improved ratio, Global Insight economist Howard Archer said it was still very difficult for many people to get a mortgage or find the required larger deposit.

It will clearly take time for confidence to improve and mortgage lending to pick up significantly, he said.