UK house prices fall to historic low
The number of houses sold in the UK in August fell to its lowest level since 1959, with only 62,000 houses being sold, less than half the figure for a year ago. Over the past three months, estate agents have been selling barely one property per week, according to the Royal Institution of Chartered Surveyors (RICS), or less than half the amount over the same period last year.
[UKPRwire, Fri Sep 26 2008] The number of houses sold in the UK in August fell to its lowest level since 1959, with only 62,000 houses being sold, less than half the figure for a year ago. Over the past three months, estate agents have been selling barely one property per week, according to the Royal Institution of Chartered Surveyors (RICS), or less than half the amount over the same period last year.
Meanwhile, figures from the British Banker’s Association revealed that mortgage approvals plunged 64% over the past year. These fell to 21,086 in August, down from 58,564 one year ago. The number of remortgages fell to 47,765, a huge drop from the six-month average of 66,626.
The average house price fell by 12.7% in the year to August, lowering the value of the average property to £174,179.
The delay in the government’s suspension of stamp duty for properties under £175,000 – in increase in the threshold from £125,000 – was criticised as a factor in further suppressing activity last month, as first-time buyers held off from purchases as they waited to see if the announced move would take effect. And even when it did happen it was seen as having little or no effect on kick-starting sales.
That is because such measures as the stamp-tax holiday and the tentative introduction of more competitive mortgage products by lenders have been overtaken by the wider crises in the global financial markets. Banks and building societies already suffering from the effects of the credit crunch, which saw them tightening their lending criteria and drastically cutting back on loan options, were dealt a further blow by the collapse of financial giants such as Lehman Brothers and AIG, which sent the interbank lending rate (LIBOR) upwards and consequently raised UK mortgage rates.
Confidence in the property market is not expected to improve as weak demand from buyers continues to drag house prices downwards, with homeowners seeing an average of £25,000 wiped off the value of their property in the last year, according to Halifax, threatening many with negative equity. Along with the much-reduced availability of mortgage financing, the greater pressure on household finances as a result of rising living costs is also contributing to lower property prices and activity levels.
And the outlook remains grim, with analysts predicting house prices will continue to fall, as the factors contributing to the wider financial crisis continue to send shock waves through the market. “For those wanting to sell their property on the current market, conditions are dire indeed, as there are no reliable indicators for predicting how low, and for how long, prices will fall before they see an upturn,” said Lawrence Smith of Decision Homebuyers.
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