House Price Fall & Forecast to Keep Falling
House prices fell in August by 0.9% according to the latest figures from Nationwide. This follows a fall of 0.5% in July and leads to a sharp decline in the annual house price inflation rate to 3.9% from 8.7% in June.Falling prices are being blamed upon an increase in supply of properties for sale over the past few months. Byers have therefore found themselves with increased bargaining power and driving prices lower.
Several economists are now forecasting further falls, reasoning that only a shortage of supply was holding up prices. Capital Econommics see prices falling by 5% this year and a further 10% in 2011. It argues that house prices were disconnected from the real economy last year & the first half of this year. Now house prices are coming to reflect what is going on in the economy, and the threat of job losses, falling incomes etc having an impact on prices.
Also the securing of mortgage founding continues to be an issue for buyers and particularly for first-time buyers helping to stifle demand. In July, just 48,722 mortgages were approved for house purchases, a level consistent with falling prices.
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