House prices suffer smallest drop in 12 months

The average house price fell by just 0.4% in November, according to the Nationwide House Price Index.

The value of the average house fell by just £430 in November – significantly less than in previous months. Between April and May, for example, prices fell by around £5,000.

This means the annual rate of house price decline has dropped from 14.6% last month to 13.9%.

Mortgage provider Nationwide Building Society stated that although the fiscal measures announced in the Pre-Budget Statement could have some indirect effect on the housing market, the measures announced to improve activity in the mortgage / housing market are more likely to help.

The Nationwide Press Release went on to state that ‘The estimated one-third of borrowers on tracker mortgages will have benefited one-for-one from base rate cuts. About one fifth of borrowers are on their lender’s standard variable rate (SVR) [mortgage]. Although SVRs do not change automatically when the base rate moves, most lenders have so far passed on a large part of the Bank of England’s 2.75% worth of base rate cuts since December 2007’.

Finally, it stated that while people on a fixed-rate mortgage don’t benefit directly from the cuts, they will face ‘much less of a payment shock’ when they come to the end of their mortgage deals.

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