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UK House Prices Situation: Average prices falling nationally
UK
House Prices Forecast: At least 5% fall by the end of
2008
First
Annual Fall since 1996 - Nationwide
The
UK's largest building society, Nationwide, has announced
that house prices have fallen year-on-year
for the first time since March 1996.
April
saw the price of an average home fall by 1.1% from March,
bringing the annual level of house price inflation down
to -1.0%.
Commenting
on the figures, Nationwide Chief Economist Fionnuala Earley
said that "April’s fall in prices continues
the trend of the last six months and reflects the weakening
sentiment in the market brought about
by poor affordability and tighter financial market conditions."
Earley
went on to say that the "steep decline in purchase
transactions over the last half year" has resulted
in stocks of unsold houses rising, putting buyers in a
much stronger bargaining position. "Higher mortgage
rates and tighter lending criteria" have also led
to mortgage approvals falling to "record lows",
she said.
Halifax
Confirms Falling Prices - Down 1.3% in April
The
latest Halifax House Price Survey, published on the 2nd
May, confirms that house prices are falling in the UK.
The
Halifax figures show that average house prices
fell by 1.3% in April, bringing the annual rate of change
down to -0.9%.
Martin
Ellis, Chief Economist at the Halifax, commented that
the bank now expects "mid single digit percentage
decline in UK house prices this year." Ellis noted
that there would be some regional variations, with areas
such as Wales and the West Midlands likely to see "falls
above the national average", while Scotland might
escape price falls altogether.
Ellis
also noted that falling house prices
are being driven not just by lending restrictions but
by a growing squeeze on incomes - with average earnings
rising by just 3.7% in the year to February, "below
the 4.1% increase in the headline rate of inflation in
the same period." In other words, people are earning
less in real terms, hence the need for a downwards adjustment
to house prices.
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