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28 Apr 2003 13:11 BST
House prices fall for first time in 18 months
LONDON (Reuters) - House prices fell for the first time in almost 18 months in April, signalling the country's housing market boom might be coming to end, a survey by property website Hometrack has said.
Hometrack said its national survey showed house prices fell a non-seasonally-adjusted 0.1 percent in April, with the slowdown being pronounced in the South East.
"After eleven months of steady decline in house price inflation since May's peak of 2.6 percent, this is the first clear sign that the property boom is over," said the report.
"This is presently very little excess demand to lift prices over the next few months," it said.
According to the survey, it took around five weeks on average to sell a home now compared with around 2.8 weeks during the height of the boom in May last year.
Mortgage lenders' prudent policy of restricting loans to less than four times the borrower's income is also limiting the size of mortgage, and hence the price of homes people can afford.
"With mortgage rates at their lowest level in 40 years, housing is very affordable. However, lenders' prudence with respect to income multiples is holding back house price rises," said John Wriglesworth, Hometrack's housing economist.
"Unless lenders relax their lending criteria, we can expect very little house price inflation in the near future," he said.
The housing market boom in Britain has been fuelled by historically low borrowing costs and its resilient labour market. However, an economic slowdown which has taken away jobs from thousands of financial professionals appears to have finally taken its toll on demand for properties.
But despite the decline, house prices were still 4.5 times average household incomes -- the highest for over 10 years. The average house price for the country as a whole is 135,300 pounds.
http://www.reuters.co.uk/newsPackageArticle.jhtml?type=personalFinanceNews&storyID=274014