Both Halifax and Nationwide recorded 1.1 per cent and 0.8 per cent monthly declines respectively, but despite prices beginning to fall, most market commentators were in agreement that a house price crash is not on the cards.
Mike Fitzgerald, sales director at Brentchase Financial Services, said that solicitors he had been in contact with were dealing with a large number of cases stemming from repossession, which pointed to a positive outlook.
“I was talking to a solicitor and he said a lot of people were buying up repossessions. A lot of people are now sitting on cash, which they are using to pick up these properties. This is different to the last housing slump which saw a lot of people out of work and unable to afford to buy up repossessed homes.”
While house price inflation has been heading downwards in the last couple of months, the majority of commentators have pointed to strong fundamentals behind the market, which should prevent a crash.
Martin Ellis, chief economist at Halifax, commented: “Strong market fundamentals, a structural housing supply shortage and pent-up demand from a large number of potential first-time buyers will support house prices, preventing a sustained and significant fall.”
During a debate at the Building Societies Association’s ‘Stepping Up To The Mark’ launch, Adrian Coles, director-general of the Building Societies Association, added: “I was at a speech recently which said a drop in house prices would be good for first-time buyers and affordability. But ultimately, if we saw a 10 per cent drop in prices, we would only find ourselves in the same situation as a year ago.”
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