Slowdown syndrome to engulf UK property

The slowdown in UK house prices shows no sign of abating with new evidence revealing that over the next three years property prices could fall as much as 20 per cent from today's inflated prices.

The predictions from Barclays Bank are the latest snapshot into the UK market, where five interest rates since November have eased activity and reigned in sky-high house prices.

According to the Bank's research, the value of the average home is set to drop £12,000 next year and decline further in 2006 and 2007.

Warnings of a housing crash have not been issued, but economists predict the slump will hit consumer confidence and impact spending habits.

The trend of the downward market has been confirmed by other recent housing indicators, but none of them predicts the fall to last for three years.

One of those testers, Rightmove, the property website, said house prices in November took the second worst tumble of the year and fell by 1.7 per cent.

They said the number of properties on the market has risen by 40 per cent since January, prompting sellers to slash prices so they can get ahead of the competition.

Data from the website also reveals estate agents are having more of task shifting houses that come onto the market.

On average, properties are staying around for about 10.5 weeks – not a great deal of exposure but 3 weeks longer than in the spring.

Commenting on figures, Miles Shipside, Rightmove's commercial director, indicated he didn’t agree with the predicted stat of 20 per cent over three years.

"Interest rates seem to have reached their peak and the economic environment remains good," he said. "Sooner or later, people's need to buy a home will overcome their reluctance to commit in an uncertain environment."

Over the last month estate agents said average asking prices have suffered a fall by £3,200, ensuring the current 'low' of £190,329.

The reduction in asking prices found support from Halifax and Nationwide, though both lenders failed to rate the sharp drop noted by Rightmove.

Meanwhile property in the capital fell by 2 per cent to give an average house price of £275,394.
This represents the highest figure across the country and is calculated from covering half of all the main estate agents in the country

Mervyn King, the Governor of the Bank of England, has warned all would-be buyers and sellers to think twice before entering into the UK market.


23rd November 2004

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