63GF Natwest.m 24

    RNS Number : 4873J
  HBOS PLC
  04 December 2008
   


    Halifax House Price Index
 National Index  November 2008


                       All Houses, All Buyers Index (1983=100)
        Monthly Change -2.6%            Annual Change -14.9%
    Standardised Average Price (seasonally adjusted)  �163,605


    Commenting, Martin Ellis, Chief Economist, said:
    "There was a 2.6% decline in average UK house prices in November. The combination of high house prices in relation to earnings,
constraints on householders' incomes and spending power and the decline in the availability of mortgage finance since the summer of 2007 has
curbed housing demand.  These factors are major contributors to lower house prices and activity.

    Lower house prices, however, mean that a key housing affordability measure - the house price to earnings ratio - is at its most
favourable for over five years at 4.56. There are also signs that the pressures on incomes may be beginning to ease. Retail price inflation
has started to decline and is likely to fall significantly over the coming months, helped by lower energy prices and weaker food price
rises."


 Key Points
 * House prices fell by 2.6% in November.  


 * House prices in November were 14.9% lower on an annual basis. The UK
 average price has returned to the level in July 2005 (�163,445). 


 * House price to earnings ratio - a key affordability measure - is declining
 significantly.  The house price to average earnings ratio has fallen from a
 peak of 5.84 in July 2007 to an estimated 4.56 in November 2008. The ratio is
 at its lowest level for more than five years (July 2003: 4.54). The long-term
 average is 4.0.


 * The UK average house price is 124% higher than ten years ago.  The current
 average price is more than �90,000 higher than in November 1998 (�73,129).


 * Housing market activity shows signs of stabilising albeit at a low level.
 The number of mortgages approved to finance house purchase was broadly
 unchanged for the fourth successive month in October at a seasonally adjusted
 32,000. The recent flattening off in approvals suggests that housing market
 activity may be stabilising.



    Housing demand is constrained by the pressures on householders' incomes and reduced mortgage availability 
    The combination of high house prices in relation to earnings, constraints on householders' incomes and spending power and the decline in
the availability of mortgage finance since the summer of 2007 has curbed housing demand.  

    Average earnings increased at an annual rate of 3.3% in September, well below the 5.0% increase in the Retail Price Index (RPI) over the
same period, resulting in falling 'real' earnings. At the same time, marked rises in fuel and food prices over the past 12 months - 39% and
10% respectively - have reduced the amount of discretionary income available to householders. (Source: ONS)

    There are signs that the pressures on incomes may be beginning to ease 
    The annual rate of RPI inflation fell from 5.0% in September to 4.2% in October. Modest monthly falls in both fuel and food prices
contributed to the decline in RPI inflation. These trends are expected to continue over the coming months.

    Key housing affordability measure is at its most favourable for over five years
    The house price to earnings ratio - a key affordability measure - is declining significantly. The house price to average earnings ratio
has fallen by 22% from a peak of 5.84 in July 2007 to an estimated 4.56 in November 2008. The ratio is now at its lowest level for more than
five years (July 2003: 4.54). The long-term average is 4.0.

    Housing market activity has fallen significantly in the past year*
    Housing market activity has fallen sharply over the past year. The number of completed home sales in England and Wales in August was 64%
lower than a year earlier. (Source: Land Registry)

    * but there are signs that activity may be stabilising
    More forward-looking data from the Bank of England show that the number of mortgages approved to finance house purchase was broadly
unchanged for the fourth successive month in October at a seasonally adjusted 32,000. The recent flattening off in approvals suggests that
housing market activity may be stabilising, albeit at a low level.

    Average UK house price is more than �90,000 higher than a decade ago
    The UK average price has returned to the level in July 2005 (�163,445). The UK average house price is 124% higher than ten years ago
(73% after allowing for retail price inflation). The current average price is more than �90,000 higher than in November 1998 (�73,129).


    The Halifax House Price Index is prepared from information that we believe is collated with care, but we do not make any statement as to
its accuracy or completeness.  We reserve the right to vary our methodology and to edit or discontinue/withdraw this, or any other report.
Any use of this report for an individual's own or third party commercial purposes is done entirely at the risk of the person making such use
and solely the responsibility of the person or persons making such reliance. � Bank of Scotland plc all rights reserved 2008.








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