Amidst a backdrop of financial uncertainty, tight credit, falling share prices and a general economic downturn, UK house prices fell at their fastest rate for 25 years. The Halifax reported a 1.3% decline in the month of September. It means house prices are falling at a rate of 13% a year.
Despite the government bailout for the banking sector, the Bank of England forecasts lending criteria will get tighter in the next few months. Furthermore, the deteriorating economic situation will only worsen the state of the housing market. Slowing growth and rising unemployment could threaten a rise in home repossessions, which would cause further falls in house pirces.
- The 0.5% cut in interest rates is unlikely to stop the short term influences dragging down house prices.
- Banks may not pass the rate cut on.
The underlying problem is not the cost of mortgage payments, but, the difficulty of getting any mortgage at all – especially for first time buyers without big deposit.
Average House prices in UK
Average house prices in the UK, according to the Halifax are now £172,108
It all depends on where you look, upmystreet are still convinced that london prices are slightly on the up.