(1888PressRelease)
June 02, 2008 - For the seventh consecutive month, house prices in the UK fell in May, by 2.5%, according to the Nationwide’s latest house price index. This is the biggest month-on-month decline in house prices since the recession of the early 1990s, and the figures are worse than expected.
The average house price is now £173,583, down £8,000 on a year ago, or worth 4.4% less than in May 2007.
While some analysts believe that the UK will escape a similar recession to that of the early 1990s due to significantly different economic conditions today, current market indicators suggest this might be overly optimistic. The fall in house prices is accelerating at its fastest rate seen since then and also for the most protracted period of time, and the problem is exacerbated by the lowest level of mortgage lending since 1993.
“The unprecedented decline in mortgage approvals for house purchases, and the accompanying decline in buyer interest, means that sellers are having a much harder time,” said Lawrence Smith of Decision Homebuyers. “They have no choice but to adjust their asking price downwards or else be prepared for a very long wait before market conditions improve.”
Howard Archer of Global Insight bears out this prognosis, predicting that house prices will fall by 7% this year and 9% in 2009. He said that "The 2.5% plunge in house prices in May reported by Nationwide is a real shock and will fuel concern that we are now headed for a sharp correction in house prices."
Besides the tightening of mortgage lending, which is part of the fall-out from the credit crunch, other factors that could have further adverse effects on the property market are the far higher level of debt faced by homeowners, the collapse of the buy-to-let sector, and the shrinking of the commercial property sector.
The magnitude and continuation of the drop in house prices certainly point to a prolonged and painful period of adjustment for the property market.
For press enquiries, please contact Phil Rendall on 020 7099 9026
Email: phil ( @ ) dhbuyers dot co dot uk
Web: www.decisionhomebuyers.co.uk
News provided by Decision Homebuyers, a leading UK property company offering a quick and simple solution for selling your home, no matter what the condition.
Decision Homebuyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.
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