UK to face further property price falls
The UK is facing two to three years of falling house prices with the latest indices showing they are already declining and experts warning of a double dip recession. The latest figures from the Department of Communities and Local Government show that residential prices fell 0.3% in July compared with the previous month. The figures, which traditionally lag behind other house price surveys, also revealed a slowdown in annual house price inflation. This stood at 8.4% in July.
The average home cost £220,240 in England, £170,782 in Scotland, £147,770 in Northern Ireland, and £157,166 in Wales, the report said. There was also a North-South divide in England, with prices in the East, in London, in the South East and in the South West, all higher than the UK average.
While the latest monthly report from the Royal Institution of Chartered Surveyors shows more surveyors are expecting house prices to fall in the coming months than at any time since March last year. Some 38% more of those asked, in the survey expected prices to fall rather than rise in the next three months. They also said that property values fell for the second consecutive month in August and Scotland was the only part of the UK to buck the downward trend in prices.
‘Looking forward, our price indicators are telling a mixed story which is consistent with the uncertainty hanging over the economy, the low level of interest rates and the lack of new house building,’ said RICS spokesman Jeremy Leaf. Meanwhile, Invesco’s Neil Woodford, one of the UK’s top fund managers, added his voice to those with gloomy predictions for the UK economy, saying a double dip recession has become more likely and house prices face three years of falls. He believes that the chances of Britain experiencing two consecutive quarters of negative growth in 2011 have increased.
‘I think, in an era where mortgage availability remains very tight and there is more supply on the market as a result of unemployment, changing job circumstances or people really wanting to cash in on what appears to be relatively high prices, these put downward pressure on the market, and I expect house prices to continue to fall,’ he explained.
And the latest property lending figures show just how weak the market is. Demand for mortgages in July continued to be weak in what is traditionally a strong month, according to the data from the Council of Mortgage Lenders.
There were 56,000 loans for house purchase worth £8.4 billion advanced in July, up from 52,000, worth £7.7 billion, in June, and from 53,000, worth £7.3 billion, a year ago but these volumes are still exceptionally weak.
More worryingly loans to first time buyers declined. First time buyers are regarded as being an essential part of a property market recovery. Yet loans to this group fell to 19,400 worth £2.4 billion in July, down from 19,700, also worth £2.4 billion, in June and from 20,100 worth £2.3 billion in July 2009.
The first time buyers’ share of the market was at 34% in July, down from 38% in June. This is the lowest proportion since before the credit crunch began in August 2007.
Its a true fact that prices of property are falling considerably day by day and still keeps deceasing maybe it’s because cash deposit flow is remaining stagnant. Hope it might be the right time for people who have enough deposit to get a property. In an attempt to sell properties which are already purchased by property agents are trying their max to clear it off before prices drop even further.