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UK housing market defies recession
By Robert Barr |
January 1, 2010, Friday
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Print Edition
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UNITED Kingdom house prices rose 5.9 percent in 2009, but analysts expect the market to slow down this year.
Average prices rose 0.4 percent in December compared to November as the rate of increase moderated, according to the Nationwide Building Society, Britain's third-largest mortgage lender.
The buoyancy of the house market in a recession was surprising, but prices have been supported by factors unique to the downturn, including record low interest rates and fewer owners attempting to sell.
Last year, "recovery has to some extent been driven by transitory factors and there are reasons to believe that it will lose momentum over the coming year," said Martin Gahbauer, Nationwide's chief economist.
"At the same time, there is no obvious catalyst on the near-term horizon that would trigger significant renewed falls in prices, such as a sharp spike in interest rates or a further pronounced tightening of credit conditions from present levels."
The average house price in the UK is now 162,103 pounds (US$261,600), Nationwide said.
House prices in London rose 7 percent during last year and the capital's outer metropolitan region did nearly as well with a 6.4 percent gain.
Prices rose 1 percent in Scotland, were marginally lower in Wales and down nearly 7 percent in Northern Ireland, the bank said.
However, the lender noted that house prices are still 12 percent below the peak in October 2007.
The Royal Institute of Chartered Surveyors said in mid-December that it expects house prices to rise modestly in the first half this year. Though more houses are coming on the market, it said, the numbers are not yet keeping pace with demand.
The government's tax break on homes selling for less than 175,000 pounds has just ended, and a levy of 1 percent will be imposed on all sales of more than 125,000 pounds. Home sales between 250,001 and 500,000 pounds will continue to be taxed at 3 percent.
David Smith, senior partner of the Carter Jonas property consultancy, said the uncertainty surrounding a national election in the first half of this year and the likelihood that more owners may be forced to sell "will act as a glass ceiling on prices."
"A stabilization in price growth, however, should be welcomed as a property market that outpaces the economy is positioning itself for a fall," Smith said.
"Like Nationwide, we believe house prices will be much the same at the end of 2010 as they are now."
Average prices rose 0.4 percent in December compared to November as the rate of increase moderated, according to the Nationwide Building Society, Britain's third-largest mortgage lender.
The buoyancy of the house market in a recession was surprising, but prices have been supported by factors unique to the downturn, including record low interest rates and fewer owners attempting to sell.
Last year, "recovery has to some extent been driven by transitory factors and there are reasons to believe that it will lose momentum over the coming year," said Martin Gahbauer, Nationwide's chief economist.
"At the same time, there is no obvious catalyst on the near-term horizon that would trigger significant renewed falls in prices, such as a sharp spike in interest rates or a further pronounced tightening of credit conditions from present levels."
The average house price in the UK is now 162,103 pounds (US$261,600), Nationwide said.
House prices in London rose 7 percent during last year and the capital's outer metropolitan region did nearly as well with a 6.4 percent gain.
Prices rose 1 percent in Scotland, were marginally lower in Wales and down nearly 7 percent in Northern Ireland, the bank said.
However, the lender noted that house prices are still 12 percent below the peak in October 2007.
The Royal Institute of Chartered Surveyors said in mid-December that it expects house prices to rise modestly in the first half this year. Though more houses are coming on the market, it said, the numbers are not yet keeping pace with demand.
The government's tax break on homes selling for less than 175,000 pounds has just ended, and a levy of 1 percent will be imposed on all sales of more than 125,000 pounds. Home sales between 250,001 and 500,000 pounds will continue to be taxed at 3 percent.
David Smith, senior partner of the Carter Jonas property consultancy, said the uncertainty surrounding a national election in the first half of this year and the likelihood that more owners may be forced to sell "will act as a glass ceiling on prices."
"A stabilization in price growth, however, should be welcomed as a property market that outpaces the economy is positioning itself for a fall," Smith said.
"Like Nationwide, we believe house prices will be much the same at the end of 2010 as they are now."
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