UK Housing Market Is Continuing To Slow Down

First Time Buyer Help and Information_01
Image by myfirsthome via Flickr

The property industry is continuing to show signs of weakness. A sharp slow down in consumer spending in the last few months and following on from last year, has heightened fears that the UK is set for a much slower growth in 2008. In spite of worries over inflation, economists are predicting interest rates will come down to 4.5 per cent by the end of the year.

Investing in UK house builders in the past year has proved difficult, with share prices slumping as much as 50 per cent. Relative to the rest of the FTSE index, the share price of house builders today are back to levels experienced in 2003. The recent reporting season of financial interim results, could at best be described as reasonable for a challenging year. All builders are anticipating more difficult trading environment in the medium to long term. Furthermore, data is also showing activity in commercial construction and civil engineering also weakening.

housing market uk

Gross domestic product (GDP) grew by 0.6 per cent from October 2007 to December 2007, this was down from 0.7 per cent in the previous quarter, according to the Office of National Statistics. The slower quarterly growth was mainly down to a weaker service sector, which slumped from 0.9 per cent to 0.6 per cent. The impact of the credit crunch and rising interest rates took its toll on the business services and the finance sector.

Howard Archer, chief UK and European economist at Global Insight said, “The faltering in consumer spending, business investment and exports in the fourth quarter increases concern that the UK growth will slow markedly in 2008 and increase pressure on the Bank of England to cut interest rates again sooner than later.”

House builders are now becoming very wary about the outlook for the housing market. Average selling prices have fallen for the last five months in a row and with the credit crunch refusing to go away, lenders are more reluctant to lend. The UK property market will continue to slow markedly, in the face of increased affordability pressures and tightening lending practices. House prices are expected to fall further due to muted housing demand, little consumer confidence and the overall British economy slowing in 2008.

Although the risk of an American recession and the knock on effects to the UK economy are lurking, low interest rates will continue to support the housing market in the short to medium term. The genuine investment case for the house builders remains finely balanced. In the long term, the general shortage of housing in the UK and demographic changes will undoubtedly support a subdued demand. It is not yet clear how quickly the building sector will recover but we have to assume that there will be downward pressures on volumes and house price inflation this year.

For first-time buyers whom are still looking to get on the housing ladder and have the financial means to do so, with property prices expected to fall even further affordability will become less of an issue. Better opportunities and deals will emerge throughout the UK (as developers and home providers compete with each other to sell to a smaller audience), during the forthcoming months leading up to the autumn. my first house

Like all previous ups and down, when consumer confidence returns, sentiments improves, a less-rigid lending criteria and mortgage availability to first-time buyers is reinstated, we anticipate a return to a strong and vibrant housing market.

Editor: Simon Weston-www.myfirsthomeltd.co.uk

Blog: www.myfirsthomeblog.com

Email: simon.weston@myfirsthomeltd.com


Bitcoin: 1BJbBAvdNHcZPZBnaFpyExUmAD9H1crosU


Litecoin:LXfkhyMe8gxdENyUc7Y5itHzFqr67F96nW

Or…

If you enjoyed this article FEEL Free to TIP My First Home Blog:


Any Amount Welcome 🙂


Dash: XmARRjJ9y2zUUgiPWPMrjviWWCvpuogwKd


Dogecoin: D5vAJ9ydfsNX1VE6e93Wh16gmUfVSUSKQq


Bitcoin: 1BJbBAvdNHcZPZBnaFpyExUmAD9H1crosU


Bitcoin Cash: 1Q8njMG4LPqFYthtNu6rq2Rbq9JqKXaPg1


Ethereum: 0x60454606e1f66C09e4fD7977b844718b683B2836

{ 0 comments… add one }

Connect with Facebook

Leave a Comment


x

Related Posts

How to buy a house with no money down
How to buy a house with no money down - Buying a house on installment terms or through mortgage always poses a problem of coming up with a down p...
Get The Most For Your Money When Buying Real Estate (Real Estate Buying)
Get The Most For Your Money When Buying Real Estate (Real Estate Buying)If you want information concerning purchasing real estate, you've come to...
Tips And Tricks For Real Estate Investment Success
Tips And Tricks For Real Estate Investment SuccessReal Estate Investment - Getting started investing in real estate as a career is something that...
powered by RelatedPosts