Property prices in the UK have yet to return to pre-2008 levels due to homeowner and homebuyer fears of an uncertain economy. Home prices remain 20% below that of rates seen before the global financial turmoil, but the news isn’t all bad. Employment looks fair for the year and lending has improved. For more on this continue reading the following article from PropertyWire.
Residential property prices in the UK fell 1.4% in April, confounding analysts’ forecasts for a rise of 0.1% and leaving average prices 3.7% lower than a year earlier, the latest index from the Halifax published today (Monday May 09) shows.
The average price of a property is now £160,395, some 20% below the peak of August 2007, and the Halifax’s housing economist Martin Ellis said that underlying trend in house prices continues to be one of modest decline.
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‘Weak confidence amongst households, partly due to uncertainty over the economic outlook, is constraining housing demand and resulting in some downward movement in prices,’ he explained.
‘Signs of a modest tightening in housing market conditions, a relatively low burden of servicing mortgage debt and an increase in the number of people in employment are all likely to be providing support for house prices, curbing the pace of decline. There are signs that house sales are stabilising albeit at a level lower than the historical average,’ he added.
According to the Halifax index prices have now declined steadily since the middle of last year.
The report points out that there are also signs that lenders are more active. ‘The number of mortgages approved to finance house purchase, a leading indicator of completed house sales, increased by 2% between February and March on a seasonally adjusted basis, according to Bank of England industry-wide figures. Approvals in 2011 quarter one were also 2% higher than in the fourth quarter of 2010,’ it says.
But economic gloom is likely to keep having an effect on the property market. The UK’s economic recovery is showing signs of faltering, with growth in services and manufacturing slowing in April. The Confederation of British Industry (CBI) said that the economy will expand at a slower pace than previously forecast this year. Gross domestic product will rise by 1.7% in 2011 compared with a February prediction of 1.8%, it said.
Last week the Nationwide property index also showed that property prices fell in April and the Hometrack survey said prices were unchanged.
This article was republished with permission from PropertyWire.