Reduced housing demand sees UK property prices fall for the first time in five years


A reduced house demand sees UK property prices fall for the first time in five years. Since 2012, there has been no dropping of house costs. However, between 2014 and 2016, a rapid growth of the house price was experienced, making the demand for houses go down.

New house price data follow the latest report by the Bank of England that indicated mortgage approvals fell to a six-month low in March. The recently released report showed a drop for the second month consecutively. Fewer people got a mortgage approval in February and March as well.

A Sudden Change?
With house prices dropping for the first time, it is speculated that first-time buyers may be able to step up the property ladder soon as the decrease makes them hopeful. According to the new data, this year’s first months to April witnessed a drop of 0.2%, revealing the only quarterly decline in a period of four and a half years.

At the moment, £219,649 is the price for the average property in the UK according to Halifax Banking Group. Halifax also revealed data that shows a drop in the housing prices by 0.1% over the past one month only, despite an annual house price increase of 3.8 percent seen. Although a 0.2% decrease may not seem much, a simple calculation shows it is a notable decline. On a single £219,649 house, 0.2% is £440 less in the seller’s pocket.

The Halifax bank housing economist, Martin Ellis commented that housing demand seems to have been “curbed” in the recent past months because of the housing affordability that is deteriorating. The deterioration is being fuelled by the rapid house price growth period experienced between 2014 and 2016.

A Variety of Factors
Ellis also attributed the homes demand constraining to the decline in pace job creation signals as well as the squeeze on-households’ finances resulting from the inflation that is increasing. A combination of low mortgage rate environment and the continuing acute property for sale shortage will assist to continue the underpinning of property houses in the coming months according to the housing economist.

Halifax looked at the customer confidence in the current property market. The bank focused on prices and whether customers think they will go up or down. About 60% of those surveyed expect the housing prices to go up come next year while 14% think the prices will drop.

First-time buyers have experienced the effect of rapid rising property prices as well as big deposits requirements, according to David Hollingworth of London & Country Mortgages.Hollingworth said the prices decline will provide first-time buyers an opportunity to accumulate deposits instead of watching prices climb at a rate faster than they could even manage to save. A data by Halifax’s rival lender Nationwide contrasted with that of Halifax last week. The data by Nationwide revealed an annual a house price growth of 2.6% as compared to the 3.8% of Halifax, indicating the lowest growth rate in four years.

The different findings of the two organisations are brought by the different tracking practices they perform. Halifax bank looks at average values in the past three months. Nationwide, on the other hand, tracks price rates month-to-month. From this, it is clear Halifax records greater movements within the entire market trends as compared to Nationwide’s short-term fluctuations.

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