Nationwide Building Society released their latest figures from the state of the UK Housing Market. These statistics suggest that house prices fell by 0.8%. It is the largest monthly drop since June 1995
Combined with other statistics and reports, it shows there has been a fundamental shift in the prospects of the UK housing market.
There is increased expectation that interest rates may be cut soon. One of the members of the Bank of England Monetary Policy Committee Mr Blanchflower has expressed his concern at the state of the UK economy. He is the strongest voice for lower interest rates.
Yesterday, Mr Blanchflower, was in Birmingham stating that the worst was yet to come for house prices and the housing market. - UK House prices set to drop (at icBirmingham)
However,
The title of this post is slightly misleading. Monthly changes in house prices can be volatile. House prices are still higher than this time last year. see this post:
- Are House Prices falling?- a guide to the complexities of the housing market statistics
Also, are falling House prices a bad thing?
Yesterday, I wrote that 2008 can still be a good time to buy a house
The Independent expressed similar sentiments in their article on the housing market here
2 comments ↓
Why will a drop in house prices effect consumer spending, this has not occurred in the U.S. The only effect a house price drop will have is to stop consumers increasing their borrowing against their property to fund their spend. A recent survey for the BBC indicates a price drop will have little effect on the spending habits of consumers.
I believe that most consumers understand that at some point they have to repay their mortgage.
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