July saw biggest house price fall on record
September 17, 2008
According to recent reports from a leading lender the month of July saw the biggest annual house price drop since records began, which was in 1991. House prices for the month fell by 1.7%, which took the annual fall to 8.1%. This comes from figures from the Nationwide. House prices have been falling for a number of months now, and many industry officials have predicted that they will continue to fall over the next couple of years, with some predicting drops as large as 20% or more over this period.
Officials state that the average house price is now around £15,000 lower than it was twelve months ago, with the average house price coming in at around £169,316. However, despite the falls house prices remain considerably higher than they were three years ago, although they are now said to be at their lowest level since August 2006. In addition to falling property prices, the housing market has also been suffering a distinct lack of activity, with many unable to sell their homes due to tight credit conditions and other factors.
One economist stated: “The weakening economy and poor housing market sentiment do not suggest that the market will recover quickly.”
However, she added that some lenders had reduced mortgage rates recently due to a fall in swap rates, which are indicative of mortgage interest rates.
She said: “As the cost of mortgages begins to come down, activity could be bolstered and restore some liquidity to the housing market. However this is not expected to happen overnight.”
Another said: “With the economy weakening and few signs of an end to the credit squeeze, the pace of the house price correction is likely to continue to gather momentum over the remainder of this year.”
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