House prices return to 2003 levels

Homeowners will be lamenting the fact that the average house price has fallen back to the same level it was in April 2003.

The news means that anyone who bought after this period may now find themselves with a property worth less than what they paid for it.

According to the latest figures from the Halifax, house prices fell by 2.2 per cent in December, bringing the total 2008 fall to a huge 16.2 per cent.

Halifax chief economist Martin Ellis predicts that although buying activity could rise in 2009, it is unlikely to go hand-in-hand with any recovery in prices.

"Improving housing affordability and an easing in the pressure on the majority of households finances should support market activity and prices," he said.

"The house price-to-earnings ratio – a key affordability measure – is at its lowest for five and a half years."

The Halifaxs decision to forego the opportunity to release a 2009 house price prediction has been seen by some as an ominous sign of a tough year to come for the housing market.

Homeowners may choose to stay put and improve rather than move. With this summer set to be one of the warmest on record, a conservatory or glazed canopy could be a prudent investment.