House price falls worse than in 1990s
A recent report has suggested that the house price falls that are currently being experienced in the UK are actually worse than those seen in the 1990s. In fact, the data suggests that in the past twelve months the average UK home has lost more in value than the whole of the period in the early 1990s when the last property price crash occurred. Since September of last year over £26,000 has been wiped off the value of the average property, and this reflects a price fall of around 13.3%.
Between 1989 and 1995 the house price fall registered overall by the Halifax House Price Index was 13.2%, so the current figure is actually higher for the past year than through the six year slump in the 1990s. According to the Halifax the average property price in the UK is now £172,108 compared to £198,533 one year ago. It is hoped, however, that the price drops may be stabilising, as the fall seen in September is said to have been smaller than those seen over recent months.
One economist, Howard Archer from Global Insight, predicted that in total by the first half of 2010 house prices will have fallen by around 33%. This would mean that the average house price could fall to under £134,000 based on the Halifax index.
Mr Archer said: : ‘House prices seem poised to fall substantially further as the fundamentals remain largely negative even though tracker mortgage rates have fallen following the Bank of England’s 50 basis point interest rate cut. ‘
He added: ‘Credit conditions remain extremely tight and this continues to exert upward pressure on many mortgage rates and limit the amount of mortgages available. Meanwhile, affordability ratios are still very stretched despite the double-digit fall in house prices seen so far.’
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