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Government figures confirm UK housing market in downward spiral |
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HOME >> NEWS >> Government figures confirm UK housing market in downward spiral |
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April 16,2008
 Gloomy data on the housing market continued to stack up today with Government figures showing prices fell by 1.6% during February.
Annual house price growth also continued its downward trend, falling to 6.7% for the year to the end of February, down from 8% in January, according to Communities and Local Government.
The figures come as the Royal Institution of Chartered Surveyors said a record number of surveyors had reported house price falls during March, overtaking figures set during the 1990s house price crash.
CLG said February's fall in prices had been driven by a 2.9% drop in the cost of flats, while detached and semi-detached homes lost 1.5% of their value, the cost of terraced properties fell by 1.1% and the price of bungalows was 0.6% lower.
Flats are typically first-time buyer properties, and the fact that these saw the biggest fall suggests people taking their first step on to the property ladder are continuing to be hit by the credit crunch, as lenders tighten their lending criteria and demand ever bigger deposits.
The average cost of a home in the UK stood at £217,737 at the end of February, its lowest level since June last year and down from £221,278 in January, which has itself been revised down.
The annual rate of house price growth fell in 10 of the UK's 12 economic regions, with only the North West and West Midlands seeing a rise.
There are also no areas where growth remains in double digits, with Scotland seeing the strongest gains of 9.7% during the past year, followed by London at 9.5%.
The most dramatic falls in the pace of house price growth were in Northern Ireland, where annul house price inflation more than halved from 8.4% to 3.7% in the space of a month, and Wales where it dived from 7.4% to 3.8%.
The average cost of a home bought by a first-time buyer fell by 1.5% during February to stand at £160,338, while former owner-occupiers paid 1.7% less at £251,797.
The Royal Institution of Chartered Surveyors also released data today showing that the proportion of surveyors who reported house price falls hit a new high in March, with 78.5% more surveyors saying the value of property had dropped, than those who reported a rise.
The figure is considerably higher than the 65.7% more surveyors who reported price falls in February, which itself surpassed the historic high set in June 1990 to be the worst figure since the survey began in 1978.
The group said the regional picture was "even more depressed", with 89% more surveyors reporting price falls in the East Midlands than those who said there were rises, while a net balance of 86% said property prices were going down in East Anglia.
But the group stressed that a shortage of homes being put up for sale should prevent a 1990s-style house price crash.
The figures come just a week after Britain's biggest mortgage lender, Halifax, said house prices fell by 2.5% in March, the biggest monthly fall since September 1992.
The housing market has been coming under increasing pressure in recent months due to a combination of the problems in the mortgage market and stretched affordability following previous strong price growth.
The Prime Minister met members of the banking industry this morning to discuss the current economic situation.
Chancellor Alistair Darling and Housing Minister Caroline Flint are also due to meet mortgage lenders and industry body the Council of Mortgage Lenders next week to discuss the problems caused by the credit crunch and what lenders can do to help borrowers who get into difficulties.
Howard Archer, chief UK and European economist at Global Insight, said: "The RICS survey in particular adds to the litany of worrying news on the housing market, and Global Insight now expects house prices to fall by 7% in 2008 and 8% in 2009.
"Furthermore, the recent escalation of the credit crunch and current rapidly deteriorating sentiment over the housing market heightens the risk that house prices could fall by 20% or more over the next couple of years."
Ed Stansfield, property economist at Capital Economics, said: "The message from today's RICS housing market survey is clear - the downturn in the housing market is gathering pace as the credit squeeze reinforces the impact of the recent loss in buyer confidence on average house prices.
"The contrast between the weakness of the housing market and data which suggest that the wider economy is slowing, but still relatively healthy, is striking.
"In our view, it illustrates just how important looser credit conditions have been as a driver of house prices. With the economy poised to slow sharply the significant correction in house prices we have long warned about now seems to be under way."
Source: http://www.24dash.com/ |
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International Corporate Governance
This issue explores how governance attributes are directly related to the substantial variation - across both countries and companies - in ownership, investment and valuation. |
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