Nationwide: UK house prices down 14.6%
The rate of decline in house prices in the UK is accelerating. Today the Nationwide released their monthly UK-wide figures on house prices and the numbers were fairly grim. House prices fell 1.4% in the last month alone, bringing the annual fall to 14.6% or nearly 20% in inflation-adjusted terms.
This is the 12th month in a row that house prices have fallen in the UK. Obviously the UK is following in America’s footsteps and looks poised to have a very sharp property fall — worse than in the early 1990s.
Ever upbeat, Fionnuala Earley, Nationwide’s Chief Economist gave a downbeat prognosis with a positive spin:
“House prices in the UK fell for the twelfth consecutive month in October. The price of a typical house is now 14.6% lower than at this time last year, the peak of the market. The typical house price fell by 1.4% in October, around the same rate as the average monthly fall of 1.3% over the last year, but lower than the monthly falls recorded in each of the previous three months. The price of a typical house is now £158,872, almost £30,000 less than a year ago, but to put in context, still almost £30,000 more than five years ago.”
She did add:
“A looming recession and continued financial market instability have uncomfortable implications for the housing and mortgage markets, and will undoubtedly affect the pace of recovery in house prices. However the speed of the economic slowdown and the determination on the part of central banks to return stability to the financial markets does mean that interest rates are likely to continue to be cut sharply which will make life easier for borrowers on variable rate loans and those coming to the end of fixed rate deals. The half percentage point reduction in October will not be the last rate cut of 2008 and the possibility of even deeper cuts this year is increasing as the Bank of England attempts to prevent a deep and prolonged recession. We believe rates will be cut by at least 50bp in the last two months of this year, but would not rule out larger moves, particularly if further co-ordinated action by central banks is warranted.”
So, property prices in the UK are going lower in the near term — probably much lower. The numbers are accelerating because annual declines are now 14.6% where they were only 12.4% in September and 10.5% in August.
It remains to be seen at what pace this decline will take, but all evidence shows that the declines have become greater in the South, where many are tied to the financial sector. See the Nationwide press release below or further details.
Twelve Months of House Price Falls – Press Release, The Nationwide