BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
World 
UK 
UK Politics 
Business 
Market Data 
Economy 
Companies 
E-Commerce 
Your Money 
Business Basics 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
In Depth 
AudioVideo 
Tuesday, 6 June, 2000, 11:46 GMT 12:46 UK
Property prices falling
A graph showing house price rises
There is growing evidence that the huge rise in UK property prices during the past year has come to an end.

According to the largest lender, Halifax, prices fell by 0.4% during May.

Rising mortgage costs
The mortgage rate rises since last September and the abolition of mortgage interest tax relief in April have added nearly 750 to the annual mortgage payments for a borrower with a 60,000 interest-only loan

The drop is exactly the same as that reported by the UK's largest building society, Nationwide, last week.

Because of the strong rises in property prices recorded during the second half of 1999 and the early months of 2000, Halifax says that the average home now costs 11.2% more than it did a year ago.

That is a sharp fall from the 14.2% year-on-year increase recorded in April.

Interest rate rises

Halifax said that price movements over the past few months indicated that the underlying pace of price growth was slowing and that the peak in the market has passed.

The drop in property prices should reduce the pressure on the Bank of England's Monetary Policy Committee to raise interest rates during its two-day monthly meeting beginning on Tuesday.


We predict annual house price growth of 12% in the final quarter of the year

Halifax

Its current series of four interest rate rises, to 6%, combined with a stamp duty increase and the removal of mortgage interest tax relief appears to have succeeded in halting the runaway rises seen in property prices.

Figures from the Land Registry last week showed that property prices in England and Wales rose by 16.8% in the year to March, the highest rise it has recorded since it started collating them in 1995.

In some hotspots prices have jumped more than a third in little over a year, rises which have been described as unsustainable.

The price of the average property in the UK is now 84,290, down from 84,819 in April, according to the Halifax.

A spokesman for the bank said: "The mortgage rate rises since last September and the abolition of mortgage interest tax relief in April have added nearly 750 to the annual mortgage payments for a borrower with a 60,000 interest-only loan.

"Whilst house prices remain well above the levels of a year ago, annual house price inflation has fallen from 16% in January.

"Annual house price growth is expected to stabilise around its current rate over the coming months as the market is underpinned by a continuing healthy economic climate.

"We predict annual house price growth of 12% in the final quarter of the year."

Search BBC News Online

Advanced search options
Launch console
BBC RADIO NEWS
BBC ONE TV NEWS
WORLD NEWS SUMMARY
PROGRAMMES GUIDE
See also:

30 May 00 | Business
House price rises stall
04 May 00 | Business
House prices rising fast
31 May 00 | Business
Record rise in property prices
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories