Thrifty Loans

House prices are continuing to stall as they fell for the second consecutive month in November as high interest rates continued to impact the market.

Housing information group Hometrack reported that the average cost of a home in England and Wales fell back by 0.2% in November to £175,700. The fall came on the back of a 0.1% drop in October, slowing the annual house price inflation rate to 3.6% - its lowest level since July 2006.

According to Hometrack prices fell across one in five postcode districts, southern England especially feeling the pinch as demand has fallen back.

Property website Rightmove and the UK’s biggest mortgage lender Halifax also warned that house prices are likely to continue their drop.

Director of research at Hometrack, Richard Donnell, said: “Continuing focus on the fall-out from the credit squeeze, along with high interest rates, is resulting in widespread caution among homeowners, the majority of whom do not need to move and who are sitting back until the outlook becomes clearer. As a result, the Christmas slowdown looks to have started early but underlying conditions remain weak.”

However, as house prices stutter to a walking pace, the rental market is on the up. The buy-to-let market has suffered some bad press recently, but many landlords, especially in the south-east, are seeing a rise in the rental market. Tenants staying for longer, shorter void periods and increasing rents make this a good time to be a landlord with property to let.

The number of people looking to rent has gone up as conditions for homeowners have deteriorated. With mortgage repayments going up, many owners have been forced to re-think their life styles and sell up. Others have been forced out of their homes by repossession.

Other reasons for an increase in the rental market include more people living alone, and a continued rise in the number of immigrants coming to the UK and looking for somewhere to live