Halifax House Price Index

RNS Number : 5441H
HBOS PLC
06 November 2008

Halifax House Price Index
National Index October 2008

All Houses, All Buyers Index (1983=100)
Monthly Change -2.2% Annual Change -13.7%
Standardised Average Price (seasonally adjusted) �168,176

Commenting, Martin Ellis, Chief Economist, said:

"House prices declined by 2.2% in October. Housing market conditions remain challenging in the face of the significant pressures on
householders' incomes and the reduction in the availability of mortgage finance since last summer.

But housing affordability is improving significantly. The house price to average earnings ratio has fallen below 5.0 for the first time
for four and a half years. We expect a further improvement in the ratio over the coming months."

Key Points
* House prices fell by 2.2% in October.

* House prices in October were 13.7% lower on an annual basis. The UK average
price has returned to the level in October 2005 (�168,031).

* House price to earnings ratio - a key affordability measure - is improving
significantly. The house price to average earnings ratio has fallen by 16%
from a peak of 5.84 in July 2007 to 4.92 in August 2008. This is the first
time that the ratio has been below 5.0 for four and a half years (4.99 in
February 2004). We expect a further improvement in the ratio as prices
continue to soften. The long-term average is 4.0.

* The UK average house price is 22% higher than five years ago. The average
price stood at �138,208 in October 2003; nearly �30,000 lower than today.

* Housing market activity shows signs of stabilising. The number of mortgages
approved to finance house purchase was broadly unchanged in September for a
third successive month, at a seasonally adjusted 33,000 compared to 32,000 in
August. Approvals in 2008 Quarter 3, however, were 25% lower than in 2008
Quarter 2.

The pinch on householders' incomes and reduced mortgage availability are severely constraining housing demand
Average earnings have increased at a slower pace than retail prices over the past year. (Average earnings increased at an annual rate of
3.4% compared with a 4.8% increase in the Retail Price Index in August, according to the latest ONS data.) Marked rises in fuel and food
prices over the past 12 months - 40% and 11% respectively - have also reduced the amount of discretionary income available to householders.

The detrimental impact of these developments on householders' spending power has severely curbed housing demand. The decline in the
availability of mortgage finance since the summer of 2007 has been a further constraint on the ability of potential homebuyers and
homemovers to enter the market.

But housing affordability is improving significantly
The house price to average earnings ratio - a key measure of housing affordability - has fallen by 16% from a peak of 5.84 in July 2007
to 4.92 in August 2008. As a result, the ratio is below 5.0 for the first time for four and a half years (4.99 in February 2004). We expect
a further improvement in the ratio as prices continue to soften. The long-term average is 4.0.

Housing market activity shows signs of stabilising
The number of mortgages approved to finance house purchase was broadly unchanged in September for a third successive month, at a
seasonally adjusted 33,000 compared to 32,000 in August. Approvals in 2008 Quarter 3, however, were 25% lower than in 2008 Quarter 2.
(Source: Bank of England)

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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END

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