House Prices Set to Fall in 2008
The Royal Institution of Chartered Surveyors (Rics) announced that the slowdown of the housing market (except for London) is becoming more pronounced after its latest survey suggests October prices fell for the third month in a row and at the fastest pace since July 2005.
Expert are warning that following new evidence the property boom has come to an end and house prices will fall on a national scale next year for the first time in more than a decade.
The Bank of England commented in its latest quarterly inflation report that “a number of risks to the UK economy next year” and Nationwide believes recent fears predicting a “mass exodus” from the sector appear “overdone”.
Nationwide went on to say that “further interest rate cuts added to the continuing lack of housing supply, could provide some support to price growth, but are unlikely to prevent a significant slowdown”.
The building society expects there will be a large regional variation in house price growth in the coming twelve months as almost all surveys suggest the market has been cooling since the summer.
The UK’s biggest mortgage lender, the Halifax stated in their latest monthly survey that “prices fell by 0.5% in October, taken the annual rate of inflation down from 10.7% in September to 8.9% last month.
The combination of increased interest rates and high prices have finally reined in the housing market, with the high property prices in relation to average incomes rising to record levels making more homes unaffordable.
For the second month in a row, house prices have dropped, the first time there have been consecutive falls since April and May 2005.
Chief economist Martin Ellis of Halifax said “The rise in interest rates since August last year and negative real earnings growth so fat this year are curbing housing demand, leading to a slowdown in both price grown and activity”.
New buyers looking to purchase homes has fallen for the 11th month in a row and overall 22% more surveyors in England and Wales in October saw prices fall rather than rise in their locality.
Good News for First Time Buyers?
All over the UK, the ‘For Sale’ signs are beginning to look weather worn as the house boom slows down. For the first time buyers, this could be the beginning of good news as houses may then become more affordable.
Renovating houses is becoming more popular as more people expand and remodel their homes as the cost of moving is becoming too expensive and far outweighs the time, stress and expense. The only ones that are benefiting at this moment in time are the DIY shops.
