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House prices 'drop 2.6%'

Halifax announced today that UK house prices have fallen again.According to the lender's latest monthly index, the value of the average home stood at around £164,000 in November.This is 14.9 per cent down on November 2007 and 2.6 per cent down on October 2008.Martin Ellis, chief economist at Halifax, suggested that the credit crunch and economic slowdown were big factors behind the continuing downwards trend."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," he said. "These factors are major contributors to lower house prices and activity."Mr Ellis added that lower house prices could let increasing numbers of potential buyers into the market - a possible driver of future recovery in the property market."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," he commented."There are also signs that the pressures on incomes may be beginning to ease."

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