Latest figures from the Halifax show house prices in the UK fell by 3.6 pc in September. The average UK house is now valued at £162,096 according to the bank.
Latest figures from the Halifax show house prices in the UK fell by 3.6 per cent in September. The average UK house is now valued at £162,096 according to the bank.
Monthly house price figures can be very volatile – particularly at times like the present when the volume of transactions is below historical norms but taking a slightly longer perspective it seems the recovery in house prices that took place in 2009 has petered out. The trend in house prices is sideways to downwards. Prices in the third quarter were 0.9 per cent lower than in the second quarter and the recent peak in prices was in January this year.
Earlier in the year, the Halifax said that house prices had stopped increasing because there had been a rise in the number of people putting properties on the market. But the latest figure suggests additional factors are now in play.
In particular, there has been a marked drop in consumer confidence since the ‘emergency budget’ on 22 June caused by increased worries about the outlook for employment, the prospect of public spending cuts and the planned increase in the standard rate of VAT. It is likely people have become more reluctant to move home, or will only do so if they can negotiate a lower price.
Is this a good thing or a bad thing?
In the short-run, a large and sustained fall in house prices would undoubtedly increase the risk of a period of disappointing economic growth and perhaps even a ‘double-dip’ recession because falling house prices, sluggish consumer confidence and weaker consumer spending would all feed off each other.
From a longer-run perspective, though, increasing house prices should not be welcomed. Economists are almost unanimous in agreeing that growth in the UK economy needs to be tilted away from debt-fuelled consumer spending (supported by higher house prices) towards exports and business investment. Furthermore, house prices are still at very high levels relative to average earnings in the UK. This makes it very difficult for young adults to take a first step on the housing ladder.
So, the fact that house prices fell so sharply in September might be a cause for concern – but an extended period of flat – or slowly falling – prices would be beneficial for the UK economy.
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13 Responses to “Falling confidence hits housing market”
Brit Lefit
RT @leftfootfwd: Falling confidence hits housing market: http://bit.ly/dkpqxa reports @ippr's Tony Dolphin
Rick Muir
RT @leftfootfwd: Falling confidence hits housing market http://bit.ly/dkpqxa
william
Falling house prices is a good thing.one of the unintended consequences of GB’s change to the system of bank regulation(ie.no regulation)was an explosion in mortgages,hence house price inflation,and a wealth transfer from one generation owning a house,against another trying to buy.This is not conducive to a happy society,the cost of a house OBLIGES mothers to go out to work and so on.Housing is an inert asset, it does not get better through reinvested profits(except for DIY).A stable house price market is desirable, ie if you live in or near central London the market will be 20 percent lower in 2 years time.Primrose Hill,you have been warned.
Billy Blofeld
You can smell the Labour party willing a double dip recession on the country.
Unleash the Unions…….
Mark Stevo
Oh come on, are you saying that under Labour house price would have been sustained at these, widely recognised, inflated levels? This has less to do with falling consumer confidence and more to do with a Reality Sandwich.