Housing market correction: Is the end in sight?

Posted under General by Michael

The 2.5 per cent fall in house prices in May is a ‘real shock’, according to market experts. The figures show just how rapidly house prices can decline, they point out. The figures were reported by Nationwide. Reacting to them, Howard Archer of Global Insight stated: “This will fuel concern that we are now heading towards a sharp correction in house prices.” warned. Archer feels that prices will fall by 7 per cent this year and 9 per cent in 2009.

Mortgage approvals for house purchases stay at historically low levels, whereas agreed sales are falling. To compound the problem, buyer interest is continuously declining. As a result, it is taking much longer to sell a house. Sellers are achieving a depleting percentage of their asking price.

The sheer size and extent of the drop in prices, even without the economy having slowed down significantly, indicates that this housing market correction might get deep and prolonged, some experts believe. Economist at BNP Paribas Alan Clarke summed up the mood, stating, ‘the news just keeps getting worse.’