House Price Growth Continues To Slow
The latest figures produced by the Land Registry reveal that house prices across England and Wales are continuing to slow. In addition, the number of house sales has also declined over the past year.
Despite a slight increase by 0.9% in actual house prices for the month of January, pushing the average property price up to £186,045, the annual rate of increase has fallen for the fifth consecutive month.
These recent figures merely confirm what further surveys carried out have already outlined; that the UK property market has undergone a considerable slowdown which stems back to last summer.
According to the Land Registry's findings, house prices in the London area continue to rise at an annual rate of 13.1%, twice as much as that for both England and Wales. However despite the upward curve in London, the city has not been exempt from the general slowdown.
A spokesman for the Land Registry said:
"The downward trend in annual growth rates nationally is also visible in the data for London, although London growth rates continue to be stronger than those of England and Wales."
Between November 2006 and November 2007 the volume of property sales in the UK has dropped considerably. England and Wales combined have seen sales figures fall by 22%.
The reason behind the downfall is perhaps due to the previous interest rate rises which according to The British Banker’s Association (BBA) and the Bank of England caused a drop in the demand for mortgages.
In addition the affects of the credit crunch within the banking industry has driven lenders to tighten their lending criteria. This in turn has led to a shortage of funds for both banks and building societies to distribute mortgages. Already several leading mortgage lenders have announced they will no longer be offering 125% and even 100% home loan deals.
Kate Barker member of the Bank of England's Monetary Policy Committee warned,
"A drop in lending might contribute to a downward spiral of house prices, which could in turn become a big short-term threat to the UK economy."
Published on February 29, 2008
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