The state of the UK housing market seems to get as much coverage in the newspapers as just about every topic, bar the latest escapades of Britney Spears driving through a traffic light. From inches of press coverage, it appears that a fall in the rate of UK house price inflation is vastly more significant than a cyclone in Bangladesh, claiming the lives of 10,000 people.
Anyway, the evidence does suggest the housing market is slowing down. With several reports showing a fall in house prices in recent months.
The first thing to be aware of is that statistics can be tricky to interpret. Often headlines may say House prices fall 2%, when what they mean is that the rate of annual house price inflation has fallen from 8% to 6%. Basically, compared to a year ago house prices are still more expensive, it is just that they are increasing at a slower rate.
The main reason for slowing house prices are
- The effect of recent interest rate increases
- Decreasing affordability
- Credit crunch resulting from US sub prime mortgage collapse has increased cost of mortgages and reduced confidence
- Slowing economy
- Shift in confidence and expectations of house prices
According to Rightmove, data showed that the dip in prices during the four weeks to 10 November knocked about £1,656 off the average price of a home in England and Wales, down to £239,986.