House prices driven down by low sales levels
Over recent months the level of property sales in the UK has plummeted, and estate agents have reported that on average they have been selling less than one property a week. Industry officials have now reported that the low level of property sales has been driving down the value of homes, and one major lender claims that house prices are now almost 15% lower than they were this time last year.
The Nationwide claims that October saw a fall of 1.4% this month, and that this has pushed the annual rate of fall up from 12.4% to 14.6%. These figures bring the average house price down to £158,872, equating to a drop of around £30,000 compared to one year ago. Nationwide officials said that property sale levels were now at their lowest in thirty four years, and that this was fuelling property price falls.
Nationwide’s chief economist, Fionnuala Earley, said: “The number of completed house purchase transactions as a proportion of the total stock of mortgages is now at its lowest ever level since the series started in 1974. 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.”
House prices have now been falling on a month on month basis for a year, although officials said that the drop in October was slightly smaller than the previous few months.
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