Monday 3rd December 2007
Property prices in the UK could be set for a fall as the new year approaches, following two months of consecutive decreases in house values.
The Hometrack housing market survey has detected a drop in house prices for two months in a row - and economists suggest this could be the beginning of a wider trend.
Only early action by the Bank of Englands monetary policy committee to lower interest rates is suggested as a means of tackling consumer concern over mortgage affordability.
But recent decisions by the committee to maintain the base rate at 5.75 per cent have been far from evenly split - with one of the nine members voting to lower rates in October and two opting for a decrease in November.
A further three members would need to be convinced of the necessity for a rate cut to take place if such a decision is to be put into effect at this weeks committee meeting on Thursday.
Bob Pannell, head of research at the Council of Mortgage Lenders, asserts that while a rate cut may be a deviation from the committees previous plans, it could still be the best option.
In the industry bodys latest market analysis, he writes: "Novembers Inflation Report appears to anticipate at least two quarter per cent interest rate cuts next year. But earlier and more decisive action may be needed."
Without such action, consumers may look to sell their house in order to lower their mortgage repayments - resulting in an increase in the number of properties on sale.
Figures from Lloyds TSB reveal that 64 per cent of recent remortgagers are being forced to reduce their expenditure on Christmas in order to meet elevated monthly repayments.
This could progress into forced house sales in the future - fulfilling the cautionary note from Royal Institution of Chartered Surveyors chief economist Simon Rubinsohn that "prices only tend to decline in a meaningful way when forced selling leads to a glut of supply".
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