For a number of months now there has been widespread speculation with regards to property values in the UK, with many experts predicting that house prices – although unlikely to crash – are set to fall over coming months. Data from a series of surveys and studies has backed up these predictions, and the past few weeks have already seen a weakening housing market with falling property prices.
In recent data released from Nationwide there appears to have been a drop of 0.5% in property values for the month of December 2007. Expert state that this is further evidence of the downward trend in property values in the UK, and this followed a tumble of 0.8% for November of last year. However, although the house prices did fall for December, on a year on year basis there was still a rise of 4.8% compared to December 2006.
Low demand in the housing sector has had a real impact over recent weeks, with high interest rates and property prices amongst other things affecting demand. Officials from the Nationwide stated that although further interest rates this year will help to improve demand the recovery will not be on the same level as that seen when interest rates were last cut back in 2005. One official stated: “This is mainly because housing affordability is starting from a much worse position than in 2005, while interest rate cuts have started from a higher and more restrictive level.”
The Bank of England cut the base rate by 0.25% in December of last year, and this was the first cut in over two years. Experts are now predicting that there will be another two or three interest rate cuts over the coming year, and that the base rate could even fall as low as 4% by the end of the year.
Popularity: 48% [?]