Outlook for UK housing market bleak

House prices in Britain fell by 3,6% in September, the largest drop in prices since 1983 according to mortgage lender Halifax.

It says the figures show that the housing market there is rapidly losing steam after a brief recovery last year.

However, rival mortgage lender, Nationwide claimed last week that house prices actually rose by 0,1% and analysts point out that the drop in prices may just be a seasonal blip rather than a worsening trend for the property market.

Halifax says that for the three months to September house prices in Britain were down by 0,9% compared with the same period last year and points out the rate of decline is significantly slower than the quarterly changes of between 5% and 6% seen in the second half of 2008.

Mortgage approvals data supports Halifax’s views that the outlook for the property market in Britain remained bleak. The September data conflicts with the data released in August when house prices rose by 0,4% and showed an increase in the three-month annual rate of 4,6%.

Halifaxexpects the housing market to fall slowly for the rest of this year and it to continue to decline in 2011.