0.2% drop in house prices

House prices fell in November, according to the latest figures from Hometrack.

The firm has revealed that prices slumped by 0.2 per cent month-on-month, a sign that things have worsened in the last month after a 0.1 per cent drop in October.

Annual house price inflation also fell sharply from 4.4 per cent in October to 3.6 per cent in November.

Commenting on the figures, Howard Archer from Global Insight admitted that the market is struggling but said that strong fundamentals should see it through.

"We believe that the downside for house prices is likely to be limited by a lack of supply, the increasing number of households, high employment and the fact that few vendors are currently having to sell for 'distressed' reasons (so can afford to delay selling in the hope of eventually achieving a price near to what they are looking for)," he commented.

"Furthermore, the Bank of England could very well trim interest rates as soon as December and we expect the bank to cut interest rates by a total of 75 basis points by the third quarter of 2008, which should provide significant support to the housing market," added Mr Archer.

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