subject: Uk House Prices Might Keep Falling [print this page] House prices have fallen by 20% in the past 5 years leaving millions in homes worth less than they paid for them. The average home in Britain is worth nearly 40,000 less than it was five years ago.
House prices across the UK felt by 0.6% last month according to the Halifax House Price Index. Prices peaked at 200,000 in August 2007, but the same home is now worth only 161,000, according to figures published yesterday by the Halifax bank. The average house price in July was 161,094. The drop of almost 20 per cent is the biggest annual drop in house prices since August 2009.
This situation has left millions of families in homes worth less than they paid for them and there are strong fears that prices could fall further.
The most affected are buyers stuck in negative equity, with their mortgage larger than the value of their property.
The Halifax figures mask huge regional variations. For example, average house prices in London have never been higher, according to figures published by the Land Registry. A home in the capital costs an average of 359,476, with a typical house in the exclusive borough of Kensington and Chelsea worth more than 1million. Since the crisis started, elsewhere in the UK, property rates decline while London property prices continued to boom. However, during last month, London market experienced a slow down for the first time in seven months.
In the North East, however, house prices have fallen the fastest, down 21.4 per cent since they peaked in the region in October 2007, according to the Land Registry.
In the North West, average prices are down 18.9 per cent, followed by an 18.8 per cent drop in Yorkshire and the Humber. Prices are down 8.2 per cent in the South East, which is the region least affected by the house price melt down outside the capital.
Last week Nationwide, Britains biggest building society, highlighted the pressure on house prices, with figures showing they are falling at their fastest rate for three years.
Howard Archer, economist at IHS Global Insight in London, said in a research note. There is a significant and mounting danger that house prices could fall further and longer due to the serious downside risks to the U.K. economic outlook, both from domestic factors and from the euro-zone crisis.
The UKs economy shrank 0.7 percent in the second quarter, the most in more than three years. All 16 economists in a Bloomberg News survey say the central bank will lower its 2012 economic outlook this week, while all but one see a reduction in the 2013 projections.
