Press release: 12 October 2007
The UK housing market's troubles have worsened this month. The Home.co.uk Asking Price Index, a key indicator of market sentiment, released data showing that prices have fallen by a further 0.6% in the last month (England and Wales). Growing fears amongst sellers and dwindling numbers of buyers have driven asking prices down in 6 out of the 9 regions in England and Wales since September. The average lost value for homeowners in England and Wales equates to £1,511 in a single month.
"Discounting of properties on the market is becoming more widespread," commented Doug Shephard from Home.co.uk. "Confidence amongst sellers has plummeted as genuine buyer enquiries have tapered off in the wake of the spectacular debacle over Northern Rock."
Many serious buyers, mindful not to chase the market down, are now playing 'wait and see' whilst sellers are growing increasingly desperate. Greater London, the UK's leading market and trend indicator also fell further this month by 0.5% as sellers were forced to price more realistically in the current market conditions.
The sub-prime fall-out for UK house prices is proving increasingly serious. According to the latest figures released by the Council of Mortgage Lenders for August, mortgage interest payments were already at their highest level since 1992, relative to income, before the credit-crisis struck in September. Even higher post-credit-crisis mortgage rates will undoubtedly lead to greater numbers of distressed sales entering the market in the coming months.
A further blow to the housing market could have been struck this month, albeit inadvertently, by the new Chancellor Alistair Darling. The Chancellor's newly announced changes to Capital Gains Tax for owners of second homes may trigger a further sell-off from buy-to-let investors and owners of holiday homes alike who wish to make use of taper relief before it expires in April 08.
However, it's not all doom and gloom for UK house prices. Whilst the immediate result of credit tightening has meant fewer buyers competing for larger numbers of properties for sale, the introduction of Home Information Packs is notably limiting the number of 3 or more bedroom homes entering the market. Reduced supply of these types of these properties, which represent around half the market, is likely to help support prices.
Notes for Editors
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