U.K. home prices in May register biggest drop in 15 years
Posted by: admin in Real Estate and HousingU.K. home prices in May register biggest drop in 15 years
Filed under: International markets, Forecasts, Bad news, Housing
The venerable George Bernard Shaw once observed that the United States and Britain are two nations separated by a common language.
Well, in the initial decade of the globalization era, one could argue that the United Says and Britain are two nations united by a common housing slump.
That’s because U.K. home prices plunged an alarming 2.5% in May 2008, Nationwide Building Society announced Thursday — the largest drop since 1991.
The U.K.’s median home price declined to173,583 pounds or $342,774. Prices are now down 4.4% in the past 12 months, according to Nationwide, the U.K.’s fourth-largest lender. Further, property values have declined for seven straight months, the longest consecutive drop since 1992.
U.K. housing slump mirroring U.S.?
London-based economist Mark Chandler told BloggingStocks Thursday there are new data points each week that advocate that those who felt the United Kingdom’s housing sector would fare better than the U.S.’s during the economic downturn, are wrong.
“We’ve got this double-whammy acting on housing prices now, so it doesn’t look too good for home prices, near-term,” Chandler stated. “Demand is weakening and lenders are increasing mortgage approval requirements. Clearly that means we won’t see the robust demand we saw for about four years, which advocates an extended down cycle, much like in America.”
Further, although Chandler doesn’t expect U.K. foreclosure rates to rival U.S. foreclosure rates during the U.K.’s down cycle, due to the lower percentage of investor-based, speculative residential properties in the U.K., but average and median home price declines might end up rivaling the U.S.’s, he stated, due to what he called “a housing frenzy” that gripped Britain earlier in the decade.
“It seemed that everyone ‘discovered’ the benefits of home ownership in about a five-year period,” Chandler stated. “Price increases in some neighborhoods were really quite breathtaking, and nearly everyone realized that they couldn’t possibly maintain the feverish pace.”
Chandler, who as a husband and dad of two grade-school kids is also in the market for a home, notes the example of neighborhoods in the Swindon - Bristol area, about 100-120 miles west of London. Home prices in several neighborhoods he’s sampled in these locales are decreasing at the rate of $1,500-$2,500 per month, “strong evidence of a pronounced housing slump,” he stated.
Entries (RSS)