Is this the start of a sustained price fall?

The government said house prices dropped 1.1% last November from the month before, with falls focused on areas of southern England.

The average price of a home was �159,480 in November, down nearly �2,000 in October, the survey said.

Year on year, house prices were up 9.7% in November - down from an annual rate of 12.1% in October.

London sluggish

The run-up to Christmas is traditionally a quiet time but this could indicate a weakening market Edward Stansfield, Capital Economics

House price inflation fell throughout the UK, although annual increases in Wales and Scotland were still well above the national average.

Price growth in London, and south-east and south-west England trailed the UK average.

House prices in the capital rose 5.2% in the past 12 months, the survey showed.

Housing market experts seemed to take the price fall in their stride.

"I don't think a slowdown as we normally experience in November and December is any great concern for the property market in 2004," said David Bitner, head of product operations at Bradford & Bingley Marketplace.

However, Edward Stansfield, property market analyst at Capital Economics - who recently predicted that house prices would peak in mid-2004 and then fall 20% - said that the survey could not be written off as a blip.

"The run-up to Christmas is traditionally a quiet time but this result along with a fall in new mortgage approvals could indicate a weakening market."

"However, it is too early to say for definite that a house price correction is under way," Mr Stansfield said.

Market confusion

The figures - collated by the Office of the Deputy Prime Minister (ODPM) - contradict recent surveys by major UK mortgage lenders.

Last week, the Halifax said prices rose 1.8% during December, giving an annual increase of 15.4%.

The Nationwide reported prices up 1.6% in December month-on-month and 15.6% year-on-year.

The ODPM survey has been up and running only for five months.

This is the second time the survey has recorded a monthly fall in prices.

The average house price in the UK fell �602 between August and September, according to ODPM figures.

While other market surveys are based on prices agreed when mortgages are approved, the ODPM's calculations are based on prices achieved when transactions are completed.

VOTE RESULTS What will happen to UK house prices in 2004? Keep on soaring 6% Small gains - up to 10% 36% Tread water 15% Falls in some areas 24% Market crash 19% 45760 Votes Cast Results are indicative and may not reflect public opinion Vote now closed

But limitations on the data on which the ODPM survey is based means it monitors only about a quarter of the UK's mortgage-funded deals each month - and does not include properties bought for cash.

The survey is also less timely than those from institutions such as the Halifax and the Nationwide.

Monday's government survey is for November prices, while the two mortgage lenders have already reported their findings on the market in December.

Your comments:

My partner and I are first-time buyers and are currently looking for our first home. We've been looking for about six months now and have kept a keen eye on the market. Within this time, several properties we were watching all dropped their prices. One three bedroom semi dropped as much as five thousand pounds within a few weeks. There is a real lack of first-time buyers in this area and I think it's beginning to show. I'm going to make an offer on a house today so wish me luck!
James, Hastings, UK

I think we've reached the limit of what people are willing to pay David, Birmingham, UK

A neighbour of mine who expected his home to be valued at �280,000 plus was recently surprised and disappointed when estate agents valued it at �225,000 and �249,999. Other houses, whilst selling in a few days, seem to be going for much less than they were during the summer.
Anonymous, St. Albans, Herts

Our area around Wokingham, Berkshire, always seems to be a good pointer to house price trends. Prices rise before the rest of the country, and similarly prices fall here first too. Prices seem to have been stagnant here for the last 12 months, and are now falling slightly.
Lawrence, UK

I wish they would! It is impossible for first time buyers to afford homes here. Rental prices are absurd too and it means that people on lower incomes just cannot live here.
Elizabeth, Oxford

Have you ever noticed that the people predicting house price growth are always the ones who will directly benefit from higher prices.

For example, mortgage lenders, who will lend larger sums and get larger returns, especially when interest rates rise as they surely will. And estate agents, who will benefit from increased fees from larger property prices and a greater number of transactions. Maybe I'm a cynic but it all seems rather convenient, or maybe I'm just a realist.
Simon, London, UK

Property prices are now totally unrealistic and a crash is both inevitable and highly desirable.
Sally Marshall, Bristol, England

Prices in this town have been very behind the rest of the country. It is only in the latter part of the year that prices have started to recover from the recession years. Unfortunately, a lot of reporting is based on prices in the south of the country so does not reflect what is going on 'up north'.
Carol Perry, Keighley, England

House prices in Kentish Town, north London, seem to have reached a plateau. This could as much be to do with market forces as the ceiling imposed by the stamp duty change at �250K - which seems to be the starting price for anything in the area.
William, Kentish Town, London

NO! I'm a first-time buyer along with my girlfriend. Together we have a combined income of �40,000 and the best thing we can afford in Winchester (where we both need to live for our jobs) is a one bedroom ex-council flat. It's beyond a joke.
Rich, Winchester

Falling in this area? You have got to be kidding! L A Campbell, East Grinstead, West Sussex

Houses prices are set by the estate agents. It is in their interest to set them high but at the end of the day the real price of a house is what someone is willing to pay for it. I think we've reached the limit of what people are willing to pay and there won't be any net increase this year.
David, Birmingham, UK

I have noticed for the last six months that the average time for a house to be sold in my neighbourhood - which used to be about 10 days - has increased dramatically with houses now on sale for more than four months. I think estate agents are asking too much for the houses and people are reluctant to buy, because they expect prices to fall this year.
Jose Vicente, Cambridge, UK

Falling in this area? You have got to be kidding! Even one bedroom box flats sell for �150,000.
L A Campbell, East Grinstead, West Sussex

I've not noticed a fall in price, but I have noticed prices freezing and more houses not being snapped up like they were 18 months ago.
Calvin, Nottingham

I seem to live in a town that's stuck in the 90s. A three bedroom property here is still under �120,000 (and that's for an older home) Don't all move here at once!
Simon Clawson, Andover, Hampshire

Well it's about time! This madness can't keep going on.
Peter, UK

I own several buy to let properties and have decided to sell them all. I think the property market is looking very uncertain and there are better options for the investor now the stock market has picked up.
Chris Oatway, Purley, Croydon

No, the exact opposite. Since buying a two bedroom terrace in Luton a year ago, the price of the house (without any modernisation) will have risen - I estimate (by looking at the selling prices of similar properties) - by about 15%.
Richard Harris, Luton, Beds

I live in a fairly "cheap" area just outside the capital and even though I am a well paid white collar worker, I cannot afford a starter flat. Who are the estate agents and other optimists trying to kid? When people can't afford to get into the housing market, that's the clearest sign of a huge boom, about to become a crash. Most of my colleagues who are already owners are saying the same sort of things they said during the dot.com boom: "It's not the same because ERM caused the last crash", "interest rates are lower" and so on. It's the kind of head in the sand behaviour that the share clubs in my company said just before they saw 99% of their value disappear in 2001.

I wish people would stop saying they want house prices to crash Stuart, Haywards Heath

It doesn't matter what people say about the state of the market anyway. When the BBC recently reported that first time buyers were disappearing and most people I know have to lie about their wages to get a mortgage - that's screams BOOM! to me. Prices either have to crash or stay stagnant for thirty years for the average person to be able to afford to get onto the bottom rung of the housing ladder. I don't think they'll freeze.
Hugh, London, UK

All the people I know who have sold or are still trying to sell during the last six months have had to reduce their asking price by 20% to 30%.
Malcolm Appleford, Berkhamsted, Herts

Prices in our village are still going up at a significant rate. Estate agents (and speculative house buyers) regularly knock on our door asking if we are thinking of selling. The price increases are partially because the price of a decent house here is still much cheaper than a smaller flat in the west end of Glasgow, some 25 minutes away by train.
John Kirriemuir, Lochwinnoch, Renfrewshire

Estate agents have to shoulder a lot of the responsibility for this. We had our house valued a couple of months ago with two leading estate agents in our area on consecutive days - the difference between the valuations was �125,000. I could buy a second home in Andover for that...
Millie Chadwick, Bromsgrove, Worcs

Every month we hear that average prices have risen another 1.2 to 1.5% but here in Bedford, prices have been falling slightly for the last 18 months and are now at the level they were at 2 years ago.
Stuart, Bedford, England

Some say Telford house prices are rising quickly. However although our property was valued last summer at �355,000 and was put on the market at this we had to reduce the price and eventually sell for less than �320,000 - some 10% lower than valued.
Mrs Martin, Telford, Shropshire

Of course prices are going to fall. It is now all but impossible for all but the most frighteningly rich people to be first-time buyers in the southeast of England. Common sense tells you that this isn't sustainable: you don't need a PhD in economics to predict what is going to happen.
Adam, London, UK

Estate Agents are doing their job - to talk up the price of the house they are selling to a compromise between the best profit for their client (the seller) and what the buyer is willing to pay. Until the majority of people realise this then the market will keep going up. Even at the height of the increases I negotiated a 3 bedroom house on the market at �169,000 down to �150,000. Have a go at haggling and playing hard to get, you do not have to pay the asking price and if everyone does it the prices will stabilise and/or fall to more reasonable levels.
Tim, Bristol, UK

I believe some areas will see slight falls next year, but in this area there is still a shortage of good quality family housing which means small rises are likely.
Peter, Southport, England

We are relocating from Dunfermline to Manchester and the difference in prices is enormous. We found that houses in Dunfermline sold very quickly since they are still affordable. In Manchester, however, the houses seem to be on the market for a long time. Based on the prices it is not surprising. There does not appear to be the demand to warrant such high prices.
Chris, Manchester

I can only speak about a particular area in south east London. The prices had their last gains in September and there hasn't been enough volume to show any real move since then. My impression is that asking prices have levelled off and actual prices are falling slightly. An increase in properties for sale may cause further falls. The only way I can see a price crash is if nervous buy to let landlords choose to sell if returns do not match expectations.
Brian, London

Lately I have been looking for a three bedroomed property in the Stoke-on-Trent area. I am a Single parent with two adult children who would like very much to give up my rented two bedroomed accommodation and opt to buy my own property. However my income is so small that I can only afford a �45,000 mortgage, and three bedroomed houses of this price are now very rare. Two years ago I could have found a suitable home, but now it is impossible. Unless I can double my income or settle for a property that's not to my liking, I have no alternative but to stay in rented accommodation.
Marie, Stoke-on-Trent, Staffs

I wish people would stop saying they want house prices to crash. A crash is no good for anyone. I got married and bought a house a year ago. It was stretching my budget a bit - but we wanted somewhere to call "home". If house prices crash by more than 25% we face negative equity. If prices crash 20% then all our savings that we've worked hard for are gone. What the country needs is stable prices - going up by inflation (2-3%) each year.
Stuart, Haywards Heath

The minority rich have once again brought problems for the majority poor.
Anonymous, Great Britain

The house next door was marketed at �360,000 six months ago and sold for �315,000 two months ago.
Brian, Chelmsford, UK

I notice that nearly all your comments come from the southern end of UK. I located here in 2002 and since then house prices have rocketed. The North East is experiencing enormous inflation in house prices and it's come as a bit of a shock. It unfortunately hasn't worked out for us up here, so we are selling up and coming back 'down South'.
Fiona, Consett, Co Durham

I don't agree estate agents are to blame for the huge prices rises, after all it's not them that pay for the properties. It is the responsibility of the consumer to pay the mortgage and ensure it is affordable and sensible. The housing market is a market economy and is governed by supply and demand at it's most basic level, agents can't govern supply of properties or alter demand for them.
Robert Johnston, Barnet, Herts

I have just sold my house in Brighouse, which is meant to have the highest increase in house prices throughout the country. Our house went up for �175,000 and we reduced it twice, eventually settling for �144,500. It took six months to sell. I noticed looking around the market in Brighouse that the prices were falling. Estate Agents were having to reduce property to sell it. I am baffled as to why banks and building societies think that prices are still rising. I am no market analyst but it is clear they are slightly falling. I have now moved into rented accommodation and will wait six months to a year and see if they fall the 20% some analyst predict.
Keith Wild, Brighouse, England

Houses are for living in, bringing up children and staying warm at night, not playing spread betting or gambling on.

Until this country focuses on human values, not crass monetary values, this country's economy will stay in boom-bust.
Anonymous

The only way that house prices will fall significantly is if unemployment rises. More people will be unable to afford their mortgages and be evicted leaving more property on the market. When new Labour came to power with claims of an and to "Boom and Bust" economics they failed to realise what a stabilising effect the odd drop has on the economy. Things cannot go on the way they are without a crash. I'm leaving the country and coming back when it happens!
Mike, Slough, UK

I work in housing and planning within local government. Warwickshire, in particular the likes of Leamington, Warwick, Stratford are all still property hotspots. The average house price in Warwickshire is �155,000. This would mean you would need to be on a salary of �40,000 plus to get a mortgage.
Heidi Antrobus, Leamington Spa, England

I have recently bought an overpriced property in an overpriced area. I expect to lose money as prices fall, and they need to fall. But all the increased or lost money I have is not real; having a roof over my head is real- and having somewhere warm I can bring my children up is real. I would rather families that need a home could afford one.
Scott, Kingston, Surrey

As you can see, I'm not on the mainland, but we are having the same problems with hugely inflated prices here. One bedroom flat no less than �150,000 anyone? What most people don't realise is that these prices affect everyone, not just homeowners. My wife and I are currently renting, and our rent for a small(ish) one bedroom flat is �1,000 a month, and that is about the going rate over here. By the way, we're not all rich, I work in retail and clear about �250 a week.
Peter Lamb, Jersey, United Kingdom

I've just pulled out of a house purchase after 4 months of inactivity from my seller. I have been surprised at the number of houses that are still on the market. Most have dropped, with some by as much as �25,000 and still they are for sale. If that doesn't bark of a need for a price correction I don't know what does.
Steve, High Wycombe

In my country, Italy, house prices never fall. They might stagnate for year, but don't fall. Why? Because when you buy there is a 10% overall overheads - on the WHOLE amount - or as much as 17% if it is a second home. Consequently there is little speculation: you buy it - you keep it. Here in the UK people cherish low taxes (come on, by European standards, the stamp duty is a joke) but you have to accept that without brakes the system as a whole is unstable, hence these wild up-down cycles.
Maurizio, Bristol