Large Falls in UK House Prices
According to the Nationwide, UK house prices have fallen by £8,000 in the past twelve months. Last month was the most significant fall in house prices since the last crash in 1992. The usual spring fillip to homebuying has failed to materialise. The average house prices in the UK have fallen from a peak of £186,000 to £173,000 according to Nationwide data.
The housing data comes on a day which showed a sharp fall in UK consumer confidence. On balance the number of pessimistic consumers has fallen to -27. This shows the close correlation between the housing market and the fortunes of the economy.
Some hope that the slowdown in consumer spending, and falling house prices may encourage the MPC to cut interest rates. But, with oil prices driving costs and prices higher, the MPC are being squeezed into a difficult situation.
The outlook for house prices is mixed. Some feel the present falls are mainly a reflection of the credit crisis which has seen a sharp drop in mortgage approvals. Other feel that it is a reflection of an underlying overvaluation in the UK housing market.
House prices are still 5% higher than two years ago and more than 10 % higher than 3 years ago. House prices are also 40% higher than 5 years ago.
Original post by Tejvan R Pettinger