Home Prices Decline Through End of 2010 on Weakening Consumer Confidence
Home prices will probably fall in the UK through the end of the year as consumer confidence weakens. With government making spending cuts and raising taxes, house prices will see a decline of about 1 per cent, many experts feel.
Fionnuala Early, senior economist with RBS Group said: "Things aren’t looking too great for the next few months. We’re seeing increases in supply, consumer confidence weakening, and we are going to see real squeezes on disposable spending." With the government cutting public sector jobs and raising taxes, gains in property values from the first half of the year will be wiped out. House prices are currently at the level they were 5 years ago. With the current market, mortgages and remortgages are becoming harder to obtain. When the housing market was in its peak, banks were offering lows as large as five times a borrower’s salary. This lifted the average house price to a record 6.2 times an individual’s earnings. This ratio has since then fallen to 5.2. That long term average of mortgage and remortgage approvals is sitting around 4.5 per cent, is another reason the housing market recovery will falter after the first month. Also, real estate brokers have mentioned home inquires are falling versus gaining in numbers. Several factors affect housing prices, but one thing is clear; the housing market recovery will occur over a long period of time and those most successful will be patient and in touch with the latest economic news.