The current condition of the UK property market has certainly raised eyebrows among the top industry analysts. After substantiating itself in the preceding years, UK home prices have taken a deep plunge after 2007. The decline has continued unabated for almost two years. New surveys conducted by Halifax and Nationwide have reveled that the property market has receded by almost 15 percent to 20 percent since the autumn of 2007.
Looking into the Future
Amid growing concerns over the global financial crises, it seems that this downfall might continue to drive the prices lower, even in the next year. How much lower is anyone's guess but looking at the recent trends, majority thinks that the UK property market will continue to shed its current price by another 15 percent. This 15 percent decline in the year 2009 amounts to a drop of nearly 30 to 35 percent which is nearly 70 percent lower than the highest property values in this decade.
The average cost of a typical English house is £224,064 with total sales of 138,487 properties in this quarter. London and its adjacent boroughs have faced the brunt of the pressure where properties have plummeted to 10 percent since the last year. Yorkshire and Humberside are close behind with 6.5 percent and 6.6 percent declines in the last twelve months, respectively.
Why the decline?
The falling property prices are due to the growing job loss which has promoted house owners to sell their homes. Banks and other financial institutions have acted accordingly by further tightening the lending rules and squeezing the supply of money for the potential buyers, resulting in less demand for new homes. Responding to the situation, existing home owners are waiting for the prices to freeze as they are unwilling to sell at a loss. It is estimated that the average household moving is now almost, once in 31 years, in this decade which is double the time period from the preceding decade. Add to the shortage of buyers, new regulations by the property agents have made it a little harder to complete the purchase process which can take up to three months, double the time during the price boom in 2007.
Efforts by the UK government
The Bank of England and the government are trying to mitigate the crisis by cutting the interest rates, decreasing the LIBOR rates and keeping a well balanced credit supply. Such policies along with the recent gains in the financials of Nationwide by almost £1.5 billion is pointing towards the fluidity of the market and easing up of mortgage. One thing is for sure! There are still many people who are willing to cash on the recent slump by borrowing the houses and then expecting to raise a profit, later on. This human greed along with the efforts of British government, the recession may end sooner then expected.
When will it end?
The big question remains; When will the property market blossom once gain? Leading bankers predict that the property market will certainly get a much needed revival by the mid of 2009. It is during this period that people will likely see an increase in home sales. For more a circumspect figure by leading analysts, the UK property is likely to regain in the initial months of 2010.