Effects of housing market cooling start to show
October 26, 2007
According to a report from the Halifax Bank of Scotland (HBOS) there was a drop in property values in the UK in September, and the effects of a cooling housing market will now start to show in the falling value of properties.
In September house prices fell for the first time since December, with a drop of 0.6%. This came as more of a shock because some experts had predicted a 0.4% increase in property values rather than the drop.
The three month rate of house price inflation now stands at 10.7% following the drop in property prices. Halifax officials state that the market is expected to cool down even more over the coming months, and have state that the economy may still be strong but house prices are likely to keep falling over the autumn. It is thought that this could also impact on the level of consumers spending, which could also fall, with one economist stating: “Since house prices gains have stalled, we believe it is highly likely that spending growth will also hit the wall in the months ahead.”
One official from the Halifax stated that the current small rises and falls in property prices are typical of a cooling market: “September’s price fall is consistent with the normal behaviour of the market during a slowdown. A mixed pattern of monthly price rises and falls is a typical feature of a more subdued housing market.”
Those that will be pleased to hear that property prices are falling are first time buyers, many of whom have found themselves unable to get onto the property ladder as a result of sky high property prices and rising interest rates. With house prices falling first time buyers will be able to go for a smaller loan in order to get onto the property ladder.
Alan Wright
26th October 2007
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