House prices continue in downward direction
The UK housing market is still not showing signs of picking up, as house prices fell by another 1.8% in February, according to the Nationwide building society, making the prospect for any recovery this year very unlikely.
[UKPRwire, Thu Feb 26 2009] The UK housing market is still not showing signs of picking up, as house prices fell by another 1.8% in February, according to the Nationwide building society, making the prospect for any recovery this year very unlikely.
The average property in the UK has seen a drop in value of 17.6% over the past 12 months, to £147,746.
And while mortgage approvals rose slightly in January, this figure was still 43% lower than the same month last year, according to figures from the British Bankers’ Association.
These findings clearly reflect the collapse of the housing market in comparison with a year ago and the continuing lack of confidence, even though lower interest rates have reduced mortgage costs for many homeowners. In particular, borrowers in areas with the highest house prices saw the biggest falls in their mortgage payments. Homeowners in London, for example, have seen average monthly cuts of £350 in their payments since the end of 2007, compared with around half that amount for those in the north of England.
Commenting on the current conditions, Nationwide’s chief economist Fionnuala Earley said, "It is too early to say that the market has reached its trough, given the economic recession. However, falling house prices and interest rates have made the situation for borrowers today much easier than it might have been."
But even with lower interest rates and house prices, the situation remains difficult for first-time buyers who are unable to come up with the large deposits required by lenders. Borrowers are required to put down at least 40% of the property’s value in order to qualify for a fifth of mortgage deals.
Another brake on potential buyers entering the market is the expectation that house prices will fall yet further. Such a scenario is anticipated by market analysts for the rest of the year, or as long as the economy keeps shrinking, with the ongoing restrictions on credit limiting the number of people taking out mortgages. Of course for those buyers at the higher end of the market, who are immune to the vicissitudes of the wider economic picture, the current conditions present excellent purchasing opportunities.
Meanwhile, sellers are having either to bide their time, hoping for the market to pick up, or else lower their asking price well below what they had originally hoped for in order to make a sale.
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