Quite interestingly, in October last year the housing market had peaked. It resulted in the average home price going up to £186,044. But on a very gloomy note for the house-owners, this figure now stands at just £158,872. And still the economists are forecasting that the average prices might fall by as much as 35 percent of the peak witnessed last year.
About half million home-owners are facing the situation of negative equity on their properties. On a still gloomy note, there are risks that about two million more house-owners are in the danger of falling in the category in the near future. In October itself the house prices have fallen by 1.4 percent. This has resulted in the annual decline rate climbing up to 14.6 percent. Since the records stared to be kept in 1991, it is the highest annual fall.
Sellers have been forced to decrease their prices to draw the attention of the falling number of buyers. Fionnula Earley, the chief economist at Nationwide, told: “Consumers still expect house prices to continue to fall into 2009 and will, therefore, be reluctant to trade without some discount on the asking price.”
During the past year the number of first time home purchasers has fallen by a massive 55 percent. And if the things go the way they are going presently, then the housing transactions might hit the rock bottom during the last 34 years.
Ed Stansfield, from the consultancy Capital Economics, told that there might not be any recovery in the prices even if rates came down to as low as one per cent. “With unemployment rising and expectations that house prices have much further to fall still widespread, lower interest rates will not stimulate housing demand.”
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