Homeowners Face More Property Price Falls
Britain's beleaguered homeowners will have to wait until 2014 at least before they see a rise in the value of their properties, as weak demand and tight lending conditions keep the market in check, a Reuters poll found on Tuesday. Home prices, which have dropped about a fifth since their peak five years ago, will fall another 1.6 percent this year and only hold steady in 2013, according to the poll of more than 20 market watchers taken in the past few days. Housing has long been a bedrock of consumer wealth in Britain and average prices tripled during a property boom in the 10 years to 2007. But they are currently around 0.7 percent lower than they were a year ago, mortgage lender Nationwide said late last month. "Some further downtick in property prices is expected this year amid weak demand and tight credit. However, a degree of undersupply in the market will prevent sustained sharp price declines," said Melanie Bowler at Moody's Analytics. The number of new homes being put on the market at the start of this month was the highest in two years, property website Rightmove said, but is still only about two-thirds of the mid-2007 level. Demand has tailed off, despite record low interest rates, as banks have been reluctant to lend money to buyers, imposing harsh conditions on new mortgages. Mortgage approvals, a good gauge of future housing market activity, aren't expected to rise much past their current rate of about 50,000 per month. The poll showed approvals at 52,000 in six months' time and 55,000 in a year - around half their average level during 2007. The Bank of England has held interest rates at just 0.5 percent for more than three years and it is not expected to move them until 2014 at the earliest as it struggles to kick-start growth. Read more.