UK house prices
UK house prices
Freak number or sign that the UK housing market is bottoming out? After months of gloom, indicators of house hunting activity have started to send out contrasting signals. And then, this week, the Halifax house price index suggested an unexpected bottoming out might be under way. House prices in January rose by 1.9 per cent on the previous month, ending a downward run that has left them 20.5 per cent below the index’s August 2007 peak.
To foreign buyers, prime London properties may superficially now look tempting, with the average house in the key £1m to £2.5m sub-sector now 25.3 per cent cheaper than it was at its peak in March 2008, according to Knight Frank. Taking into account the yen’s appreciation against sterling, for example, the cost to a Japanese buyer of a house in this price band has fallen by 48 per cent in 10 months. For eurozone buyers, prices are now about 30 per cent off their peak.
With the UK economy set to contract by 2.5 per cent to 3 per cent this year, a turnround seems far-fetched. News yesterday of a 51 per cent jump in the number of insolvent companies in the fourth quarter of 2008 is a harbinger of rising unemployment. Given that all but the most liquid buyers are struggling to obtain mortgages, house prices will find little support from improving affordability. If you trust derivatives markets, expect two years of falling prices, then stagnation
FT.com
Category: Property News
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