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Personal Finance News – British Home Prices To Drop By One Quarter

by Jim ONeil on January 12, 2011

in Personal Finance News

Halifax, the largest mortgage lender in Britain, reported that average home prices fell to £162,435 during November 2010. This is a 1.3 percent decrease from October 2010 and a 1.6 percent decline from November 2009. Before 2011 is over, the typical price of a British home may drop by one-quarter, to £150,000.

To blame for the anticipated decrease throughout this year are concerns regarding the economy. The total effect could be a decline of £50,000 since the credit crisis began in August 2007. At that time, housing prices averaged £199,612. Halifax housing economist Martin Ellis reports that economic uncertainty, increased taxes, and weak growth in earnings may cause demand to decrease.

All of this comes at a time when many speculate that the interest rates will be increased by the Bank of England in order to fight off higher inflation. Global Insight economist Howard Archer says that an interest rate increase in early 2011 would decrease demand. This will not only be due to the obvious reasons but also due to the psychological impact on homebuyers facing increasing interest rates.

Nearly one-third of British mortgage holders are now on the standard variable interest rate offered by their lenders. The increase, to 31 percent, can be compared to 26 percent one year ago. Many mortgage holders have no plans to change their situation, because either the rate is cheaper than other available mortgages or they cannot afford another deal because of stringent criteria regarding lending.

Bad weather at the end of 2010 caused a seasonal slowdown within the housing market to be even worse, say real estate agents. There is some positive news to report: there may have been a 2.6 percent increase in the number of properties sold during 2010. Mortgage lending activities will be the key determinant for the 2011 housing market in Britain.

bel

They probably want us all to purchase stuff on credit but that will stuff them because we all hate them even more now, and those of us with any sense will not need something that desperately.

The thing is they are screaming for help from the wrong sort >Government Bailouts are wrong and not a long term solution they help big business and small business but not I, a self-employed person and the very last thing I will do is sign on and take their measly patronising benefits this just gives some oik too much paid paper work and wastes a life.

kwald lephersanz

Property: House prices drop 0.2% in April – Investing Strategy – Mindful Money

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