More pain for homes
The clouds gathering over the housing market darkened yesterday when Britain’s biggest building society reported the biggest annual drop in house prices since records began.
Mortgage lender Nationwide said property values were now 8.1 per cent less than last year ago, almost a £15,000 decrease. The average cost of a home in Britain is now £169,316, its lowest level for two years, according to Nationwide. A 1.7 per cent drop in July, follows on from a 0.8 per cent slide in June and is the ninth month running that property prices have dived.
Fionnuala Earley, chief economist at Nationwide, said the economic picture was worsening with consumers tightening their belts and unemployment rising.
“Overall the weakening economy and poor housing market sentiment do not suggest that the market will recover quickly,” she said.
Further gloom about the housing market arrived yesterday as HBOS bank, which owns the country’s largest lender Halifax, predicted that house prices would fall by 20 per cent by the end of 2009.
This is bearish compared to some economists. Research house Capital Economics think that values will dip 35 per cent by the end of next year.
Estate agents are reporting that transactions are 40 per cent down on last year with the average number of sales per agent at its lowest ever level.
A report from ratings agency Standard & Poor on Wednesday said one in seven homeowners could face negative equity in Britain if house prices fall by 17 per cent.