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British house prices plunge nearly 16%
By Pan Pylas |
January 7, 2009, Wednesday
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Print Edition
BRITISH house prices fell by their biggest annual amount in at least 56 years during 2008 as credit seized up and incentives to enter the market evaporated amid sliding home values, a leading mortgage lender said yesterday.
The Nationwide building society said house prices fell by 15.9 percent in December from a year earlier, the biggest annual fall since the Nationwide started compiling statistics in 1952.
"2008 has been a year of turmoil in the British housing market," said Fionnuala Earley, Nationwide's chief economist.
Prices fell 2.5 percent in December from the previous month, much more than the 0.4 percent decline recorded in November, and the biggest one-month drop since May's 2.6 percent drop.
Despite the historic declines recorded in 2008, the Nationwide did point to one ray of light in the data gloom. It noted that the three-month rate, which smooths out more volatile monthly numbers, showed only a 4.2 percent decline, the lowest since May.
Nevertheless, Earley said the length and depth of the recession in the wider economy is so uncertain that it makes no sense to produce a meaningful forecast for house prices.
"Conditions remain highly volatile going into 2009, making it more difficult than usual to arrive at a specific forecast for house prices," said Earley. "In these unsettled times a forecast subject to frequent change could itself add to greater uncertainty."
The last time Nationwide did not issue a full-year forecast was in 1993 when the British housing market last crashed.
Halifax, which is part of the HBOS PLC banking group, has also refused to issue a house price forecast for 2009, though it claimed its stance was due to its impending takeover by Lloyds TSB PLC.
Most economists doubt that 2009 will be any better, primarily because house prices continue to look expensive on affordability measures and the drying up of credit.
Moreover with the economy set to fall by up to 3 percent, according to some forecasts, and unemployment heading toward 3 million, the downward pressure on house prices will likely remain.
The Nationwide building society said house prices fell by 15.9 percent in December from a year earlier, the biggest annual fall since the Nationwide started compiling statistics in 1952.
"2008 has been a year of turmoil in the British housing market," said Fionnuala Earley, Nationwide's chief economist.
Prices fell 2.5 percent in December from the previous month, much more than the 0.4 percent decline recorded in November, and the biggest one-month drop since May's 2.6 percent drop.
Despite the historic declines recorded in 2008, the Nationwide did point to one ray of light in the data gloom. It noted that the three-month rate, which smooths out more volatile monthly numbers, showed only a 4.2 percent decline, the lowest since May.
Nevertheless, Earley said the length and depth of the recession in the wider economy is so uncertain that it makes no sense to produce a meaningful forecast for house prices.
"Conditions remain highly volatile going into 2009, making it more difficult than usual to arrive at a specific forecast for house prices," said Earley. "In these unsettled times a forecast subject to frequent change could itself add to greater uncertainty."
The last time Nationwide did not issue a full-year forecast was in 1993 when the British housing market last crashed.
Halifax, which is part of the HBOS PLC banking group, has also refused to issue a house price forecast for 2009, though it claimed its stance was due to its impending takeover by Lloyds TSB PLC.
Most economists doubt that 2009 will be any better, primarily because house prices continue to look expensive on affordability measures and the drying up of credit.
Moreover with the economy set to fall by up to 3 percent, according to some forecasts, and unemployment heading toward 3 million, the downward pressure on house prices will likely remain.
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