House Prices Sharpest Drop Since 2009

This article tells us how notwithstanding house price falls there are predictions of a modest upturn in the housing market. The article maintains a focus on the relationship between housing completions and economic growth – at the moment both are bumping along the bottom. This is making life very difficult in terms of limited increases to the rural housing stock and with house price falls limited current interest or finance for building more. The Government announced a new scheme to free up increased bank lending for amongst other things housing purchases. It will be interesting to see what impact it has – for more information on it (Funding for lending) have a look at this article in the Guardian.

As for the article itself it tells us:

“House prices recorded a fourth fall in five months in July and ended the month 13% down on their 2007 peak, according to figures from Nationwide.

The building society’s figures show the price of a typical UK house fell by 0.7% in July, bringing the annual decrease to 2.6%. Someone selling a typical home could have expected a valuation of £165,738 in July 2011, the building society said; now the same property would be valued £1,349 lower at £164,389.

The 2.6% fall was the biggest year-on-year drop since August 2009 and put house prices 13% below their 2007 peak. Despite this the building society proffered an optimistic view on the figures.

“The UK economy has contracted by 1.4% over the past nine months and is now 4.5 percentage points smaller than it was in Q1 2008,” Nationwide’s chief economist Robert Gardner said.

“Against this difficult economic backdrop it could be argued that UK house prices have shown resilience. While prices are currently 13% below their 2007 peak this is less than the declines seen in a number of other economies that have experienced similar or more robust economic recoveries.”

Gardner added that he continued to expect a modest recovery in the quarters ahead, both for the UK economy and the housing market.”