UK house prices fell by 16% in 2008

Posted under Advice by Alan

The Nationwide Building Society in its latest survey has confirmed 16% fall in house prices in the UK in 2008 and reported average price down to £153,048.

December 2008 witnessed 14th consecutive fall of 2.5% in house prices, making it 18% lower than peak in October 2007.

According to Fionnuala Earley, the chief economist at Nationwide, 2008 proved to be turmoil for the UK housing market. Upheaval in financial market had worse effect on real economy than predicted a year ago.

Fionnuala Earley explained that housing market was expected to cool quickly due to poor affordability and tough economic conditions, but sharp fall in house prices and alarming slowdown in global and domestic economy of this magnitude was beyond expectations.

She admitted that highly volatile conditions have made it difficult to give precise forecast for 2009.

However, the chief UK and European economist, Howard Archer, at HIS Global Insight has estimated that house prices would come down by another 15% during 2009 as securing mortgages and paying deposits was still a difficult proposition.

Nationwide considers that demand for borrowing would be a crucial factor in 2009. It is anticipating that potential buyers would wait till significant fall in house prices and many would keep their buying plan in abeyance for fear of losing employment in the existing uncertain conditions.