Property values in the U.K. are down, with August seeing the most dramatic drop in prices in 16 months. According to analysts, the housing market will undergo a re-pricing that could last up to a year.
The average price for homes fell almost half a percent from July. This is the biggest drop on record since April of last year. Homes now cost on average around 158,000 pounds, which only furthers the suspicion by many that the housing market is becoming weaker. Some economic experts also predict that future data will show a drop in mortgages as well.
According to Bank of England Deputy Governor Charles Bean, the economy will remain fragile, and it may be necessary for the Government to increase their stimulus in order to help with the economy.
Richard Donnell of Hometrack Ltd. states that there is a “growing weakness” in the demand for housing, and that this weakness may last for more than just one season. He has also stated that a large supply of available homes could be the cause of the falling prices.
The “scarcity of housing for sale” over the last two years drove up prices dramatically, but now that more and more houses are becoming available, it appears that the demand has gone down along with the prices of homes.
Charles Bean has said that “recovery remains fragile”, and that a “margin of spare capacity” has not yet been worked off. Bean believes that the Government must intervene in the economy in order to make it stable. But as housing prices and mortgage rates continue to fall, it appears that a full recovery is a ways off.
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