Are there signs that the once red-hot property market is cooling fast?
It's a question worth asking as house prices in the UK fell for the second month running in October.
HBOS's Halifax house price survey showed house prices fell 0.5% on the month hot on the heels of a 0.6% drop in September.
In case you didn't know, that's the first time house prices have fallen two months in a row since 2005.
The fall has brought annual price inflation down to 8.9%, from a high point of 11.4% in August and leaves the average UK house price at £197,248, Halifax said.
How did this happen?
It has all come about due to a potent mix of financial market turbulence, tighter lending conditions and falling confidence. This is now raising concern that the market, (which had looked set for a gentle slowdown), could enter a more prolonged downturn.
"A sharp housing market correction is a genuine possibility," said Howard Archer, chief UK economist at Global Insight.
Other forward-looking indicators are also painting a bleak picture. Mortgage approvals have fallen to their lowest level in two years and the number of prospective buyers registering with estate agents is dropping at a record pace, according to property consultant Hometrack.
Housing market collapse?
But before you start hyperventilating and start thinking there is going to be a housing market collapse, you must remember that the typical ingredients that make up a collapse (a sharp rise in unemployment or interest rates, for example) are lacking.
Oh and the Halifax's figures contradict last week's claim by Nationwide building society of a 1.1% rise in prices over October.
Howard Archer, chief UK economist at consultancy Global Insight, said:
"Housing data can be very volatile on a month-to-month and survey-to-survey data, and we suspect that the Nationwide survey was an outlier. "Most data and survey evidence are pointing to weakening housing market activity and cooling prices in the face of slowing activity, increased affordability pressures and tightening lending practices, and the Halifax data are certainly consistent with this."
"Historically we have tended to put more weight on the Nationwide series but we expect other house price measures to cool broadly in line with the Halifax series by the end of the year," said Peter Newland, UK economist at Lehman Brothers.
The Halifax index showed the annual three-month rate of house price inflation eased to 8.9%, from 10.7% in September. It was the first time it has fallen into single figures since February and the lowest annual rate for a year.
No change in interest rates
Analysts had expected the Halifax index to show house prices picked up in the month of October and the weak reading boosted speculation that the Bank of England may have delivered deliver a surprise interest rate cut but instead there has been no change with the BoE keeping rates at 5.75%.
Going forward, most commentators are predicting an almost static market next year with Hometrack and the Council of Mortgage lenders have both said they expect a 1% rise in prices in 2008, while Capital Economics is predicting a 3% fall.
So, it seems that although there might be short term blips happening in the market right now, the longer term diagnosis is still quite positive.
And if you want to keep up to date with the latest houseprice facts, figures and news, you should visit Housepricecrash.co.uk
House prices falling at fastest rate in 2 years