by Mark Johnston
The UK’s largest mortgage lender, the Halifax has published its monthly house price report which shows a further decline in the value of an average priced home in the UK. The Halifax report showed a 1.3% decrease in the price of an average house in the UK to just £162,435.
Although the 1.3% decrease from the previous month only equates to a 1.6% loss when looking back to the same time last year, experts are still concerned. Many analysts are now predicting further falls throughout 2011 with some even suggesting the average house price will drop to just £150,000.
Back in 2007, with the economy in full swing and before the financial crisis hit, the average house in the UK has risen to just less than £200,000. Three years later, following the world wide economic banking crisis the cost has dropped to £162,435 and is still falling.
A housing economist at Halifax , Martin Ellis said: “Uncertainty about the economy, weak earnings growth and higher taxes could put some downward pressure on demand.”
Another industry experts, Howard Archer from Global Insight said: “Any early interest rate hike in 2011 would be bad news for the housing market and likely to weigh down on prices – not just the rate rise itself but the impact on potential house buyers’ psychology resulting from the fact that they would be facing rising interest rates.
Mr Archer then went on to say “Critical to the development of house prices over the coming months will be the amount of houses coming on to the market, mortgage availability, how well the economy and jobs hold up as the fiscal squeeze increasingly kicks in, and what happens with interest rates.”
A recent survey suggested that borrowers have come to rely on the low interest rates. Up to 30% of home owners have decided to remain on their lenders standard variable rate. With interest rates so low, many home owners don’t see the benefits of fixed rate mortgages but have left themselves exposed on variable loans that will increase if rates go up.
Jennifer Warner, of Globrix, said: “The key driver for the market in 2011 will be mortgage lending activity. Mortgage availability is key to a healthy property market, particularly for first time buyers. The expected rate increase from the Bank of England, which now seems a question of when rather than if, will also shape the market this year, possibly leading to lower prices and greater affordability for first time buyers.”
Estate agents too are approaching 2011 with caution. Falling house prices together with poor sales at the end of 2010 due to the adverse weather has led many to predict a slower new year. Peter Rollings managing director of estate agent Marsh & Parsons, said: “The worst snowfall in a century reined in the number of buyers hitting the streets and viewing potential properties across many areas of the country.”
That said, some areas are starting to recover and in certain markets there has been increases of up to 2.6%. The only thing to be sure of is that 2011 will see a rocky recover which may see things getting worse before they get better.
Story link - Halifax Announces Further Falls in House Prices
Related stories to : Halifax Announces Further Falls in House Prices