UK house prices fall to 3-year low

It has been another month of bad news for homeowners, even though the Bank of England has continued to slash interest rates, house prices in the country, on average, have fallen back down to 2005 levels.

Banks have continued to tighten their lending which has meant that the housing market has all but stagnated, with the average house worth 161,400 pounds in November, which is down 8.1 percent from 2005 levels.

According to the director of research at Hometrack, Richard Donnell, the market has essentially been taken back to its bare bones because of the lack of demand made worse by the reduced availability of mortgages.

Last month sellers had to wipe off almost 11 percent from the asking prices before a buyer was found, which is an even more tangible indication that the property crisis still has a further way to fall before it reaches rock bottom.

The Hometrack report follows on by the announcement that the Royal Bank of Scotland (RBS) would allow homeowners the leeway to miss up to six months of mortgage payments before initiating repossession action.

RBS, which owns NatWest, accounts for 7 percent of the mortgage market and this measure is a sign that the bank is being lenient in the face of difficult times by doubling the allowance to six months.

Story link: UK house prices fall to 3-year low