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House prices tumble again but rate of decline slows By Daniel Pimlott, Economics Reporter Published: April 13 2009 03:00 | Last updated: April 13 2009 03:00
House prices are falling at a slower rate, according to the FT House Price Index, although March still registered the 13th successive month of decline. Prices were down by 0.9 per cent last month, compared with a 0.8 per cent drop in February, according to the index, compiled by Acadametrics. However, the average monthly rate of decline in the past three months was 0.9 per cent, compared with 1.9 per cent for the previous quarter. The average price of a home in England and Wales is £200,086 - down 13.4 per cent, or £31,738, since the peak in February 2008 of £231,824. The decline has been fastest in the south-east and London, and slowest in Wales and the north-west. In London, the borough of Kensington and Chelsea has suffered most, with a 22 per cent annual drop. Peter Williams, chairman of Acadametrics, said: "The index suggests that the rate at which prices are falling is slowing." The monthly rate was a 2.2 per cent fall in November. The evidence of slowing comes after the number of monthly mortgage approvals rose by 19 per cent in February and amid lenders' expectations of slightly better credit conditions during the next three months. "Quite simply, one swallow does not make a summer and the balanced view is that the evidence is mixed at present, but slightly less negative," said Mr Williams. "But if the recession can be managed down in terms of impact and the supply of mortgage finance increased, then there is a real prospect of the housing market contraction at least bottoming out in 2009." However,prices can be expected to fall further. Rising job losses and tight lending conditions lead many economists to believe a recovery is unlikely until next year. Deposits required for first-time buyers - who are key to the market because their purchases allow other homebuyers to "trade up" - are at their highest since records began more than 30 years ago. And the historical precedent does not seem encouraging. The 13-month period of falling prices is the longest consecutive decline since the housing slump of the early 1990s. During that downturn, prices fell for more than three years, rising during only two months out of the entire period. The late 1980s boom was more rapid in the pace at which house prices increased, but the subsequent recession was not as deep as the current downturn has been. The FT index suggests a more modest price fall than figures compiled by some mortgage lenders. www.ft.com/housepricemap Copyright The Financial Times Limited 2009
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