A report from the Nationwide Building Society makes for good reading for potential house-buyers, but could be unsettling for sellers.
Fall
Findings from the report show that house prices in the UK fell by 0.7% in July, with the average price of a property standing at £164,389.[1] This is a decrease in decline rate in comparison to July 2011, where house prices dropped by 1.5%.[1] Worryingly, this indicates the housing market is the weakest it has been since August 2009.
The housing market is intrinsically linked to employment. As such, a new scheme has been announced where businesses can obtain cheaper loans, giving them more money for new employees. It is hoped that the knock-on effect of this is that more people will be able to afford homes.
In addition, mortgage providers will be able to offer cut-price rates, which again will assist the housing market.
Slow growth
Despite this, chief lenders economist Robert Gardener has urged caution in the coming months. Gardener said: “With the Eurozone situation deteriorating again in recent weeks and few signs of recovery in domestic demand, we continue to expect only a modest recovery in the quarters ahead, both for the UK economy and the housing market.”[1]
Despite economic output being 4.5 percentage points lower than in 2008, there have been 250,000 new jobs created this year to date.[1] This is believed to have led to just a slight drop in property prices in comparison to countries such as the USA, where the market is over-valued.
[1] http://www.justlandlords.co.uk/news/Housing-Market-and-Unemployment-1350.html