Property Market stagnates – as mortgage lenders tighten up on product criteria.
House Prices have seen its sharpest drop since the 1990s. Halifax reported a fall in house prices by 2.5 per cent during March 2008.
The overall growth has been at its lowest this year as house prices across the country is just 1.1 per cent higher than they were a year ago.
The 2.5 per cent fall in house prices is not evident in all areas of the UK; Greater London experienced a 1.6 per cent increase in house prices, East Anglia saw a 1.4 per cent increase in house prices, compared to East Midlands which saw a 2.2 per cent increase. Areas such as West Midlands and Wales saw a fall in house prices of 5 per cent and 4.7 per cent respectively.
However significant this fall may seem, when it is put into context with the 171 per cent increase over the last 10 years and 51 per cent over the last 5 years the fall in house prices could be seen as a welcomed correction in the market.
Mortgage lenders are becoming stricter on their product criteria; therefore we are seeing buyers with little or no deposits being declined for a mortgage. This is having an adverse effect on the property market as we are seeing bigger properties remaining on the market for longer than usual as further down the chain first time buyers buying the properties of those wanting to upgrade cannot get a mortgage.
This will see further fall in house prices and therefore may prompt the Bank of England to reduce interest rates by a further 0.25 per cent to 5 per cent tomorrow.
