According to the latest Nationwide House Price Index, UK house prices fell at a more moderate pace in November, easing by 0.4 per cent to stand 13.9 per cent lower year on year. The rate of decline is significantly less than that seen in last October when house prices fell by 1.3 per cent.
The Chief Economist at Nationwide, Fionnuala Earley said that the average house price was now £158,442, roughly £25,000 lower than this time last year, but still about £25,000 higher than the average price in November 2003. According to Ms Earley, with the present economy in recession conditions, it does not appear very favourable for a swift recovery in the housing market, although there is a moderation in house price falls recorded in November.

Ms. Early added that the labour market is weakening, leading to uncertainty about the stability of homebuyers’ future income streams and moreover, with house prices falling since late, the prospective buyers had little reason to rush into the market now. But, the estimated one-third of borrowers who are on tracker mortgages – where rates move in line with those linked to Bank of England rates – will benefit by the steep fall in bank interest rates in recent weeks.

Furthermore, Ms. Early comments that, “one particularly acute feature of the current housing market is that its turnover has fallen to historic lows, even below the levels in the 1990s when economic conditions were worse than they are today,”

In the fourth quarter of 1990, the interest rates were 14 per cent and the number of unemployment that time was almost doubled, despite these facts, a greater proportion of owner-occupiers were taking out mortgages to move house and 60 per cent of first-time buyers were taking out mortgages worth 90 per cent or more of the purchase price.
Ms. Earley is of opinion that caution among lenders may be a factor in limiting turnover.

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