|
U.K. house price growth slowed on a yearly basis for the second
month in a row as five interest rate rises since November 2003 curbed
consumers' confidence. Respected economists are increasingly warning
of a slump in UK house prices whereas estate agents reassuringly say
there may be signs of a gentle slow down. The statistics show that
house prices have risen at a incredible annual rate of 15% over the
past five years. This compares with an average annual increase of 9%
over the past 30 years and less than 7% a year since the 1930's. In
its recent World Economic Outlook report, the IMF said that a
slowdown in UK house prices should remain manageable. However, it
warned that it could not rule out a collapse - "There is a danger
that higher interest rates could trigger a much larger downward
adjustment in house prices,"
Nationwide Building Society:
"Following five increases in base rates since November 2003,
consumers have moderated their views about the future value of their
homes and only half (49%) now expect their homes to increase in value
over the next six months. Just three months ago two out of every
three (64%) said they expected their property to continue to rise in
value. Regionally the most optimistic are those in Northern Ireland
where, over the past three months 67% have said they expect their
homes to continue increasing in value, Scotland (65%) and the North
West (63%). The most pessimistic are those in the East of England
where 14% expect their homes to fall in value and the West Midlands
where 13% expect to see a fall in the next six months.
The survey also shows that people are cautious about buying major
items, such as houses or cars with only 28% believing that now is a
good time to make a major purchase, compared with 31% in June.
Consumers' confidence in spending money on home makeovers has risen
over recent months, despite declining optimism about the future value
of house prices - the majority (61%) believe that it is a good time
to buy household goods. Those aged 45 and over, many of whom are
homeowners, are the most confident about investing in home
makeovers." - Nationwide Press Release, 8th September 2005
Halifax Building Society:
"A number of other key market indicators have shown a weakening in
activity over the past few months. For example, the monthly RICS
survey has shown both a rise in the stock of unsold properties on
estate agents' books and a fall in buyer enquiries in recent months.
Both developments are indicative of a fall in housing market
activity. Nonetheless, the stock of unsold properties remains at a
low level on a historical basis and is still 14% lower than a year
ago. Additionally, the fall in buyer activity has been less
pronounced than during the Iraq war in 2003.
The number of mortgages approved for house purchases fell in July for
the second successive month and was 27% below its peak in December
2003 on a seasonally adjusted basis, according to the latest Bank of
England figures. The number of approvals in the three months to July,
however, remained 3% above the average quarterly level recorded over
the past five years.
These indicators show that activity levels remain at historically
high levels despite recent signs of weakening. These results are
consistent with a moderating housing market." - Halifax House Price
Index, August 2005
Bank of England:
"An increasing weight of evidence suggested that the housing market
might be cooling, with a range of indicators pointing in the same
direction. House price inflation had been lower on both
lenders’ indices in August, with the Halifax index falling 0.6%
compared with the previous month.
The July RICS survey of estate agents had shown a further fall in the
balance of survey respondents reporting price rises in the previous
three months. Indicators of housing market activity had also
continued to weaken: new mortgage approvals for house purchase had
fallen sharply in July and the July RICS survey had indicated a
further fall in the ratio of respondents’ sales to stocks. But
even if the market had begun to cool, it remained highly uncertain
how rapidly and by how much house price
inflation would moderate, or indeed if it might pick up again for a
time. The impact of any given change in house prices on consumption
was also uncertain.
The Committee judged that a turnaround in the housing market would
restrain consumer spending to some extent. But as explained in the
August Inflation Report, the weaker association between house prices
and consumption in the past few
years had led the Committee to judge that the relationship might also
be less strong in the future as house price inflation slowed." -
Minutes of Monetary Policy Committee Meeting 8th/9th September
2005
1st October 2004
More house,
home and property articles >>>
|
