UK Housing Market Continues to Slow

A new report released yesterday (Mon 1st) by housing market analysis firm Hometrack showed a 0.9% fall in house prices during October.

These alarming figures suggest a major monthly drop, the biggest since January 2009, compounding worries about a potential double dip in the housing market fostered by the upcoming government spending cuts. The findings of this survey are generally supported by the building society Nationwide’s announcement of a 0.7% drop in house prices during October which was delivered on Thursday.

The market has been in decline since June, when a short term recovery from the major recession began to evaporate. Although average prices remain higher than back in the first 2 quarters of 2009, the short term trends definitely suggest cause for concern.  This recent downturn is attributed largely to a combination of excess housing supply and uncertainty over the future direction of the economy at large. Some analysts are also suggesting a fall in mortgage approvals is also to blame. 

The downturn is unlikely to ease as we head towards Christmas which is typically a slow period for the housing market, and the New Year is unlikely to bring improved prospects as government spending cuts and the rise in VAT begin to come into effect.