Acerts

According to a recent report house prices have fallen to a lower level than they were a year ago. This means that house prices have dropped in real terms for the first time since 1996, with the average house price down by 1% compared to April of 2007. According to officials from Nationwide the average house price is now £178,555. Officials claim that this is the most solid sign yet that the housing boom that has taken place over the past ten years has finally come to an end.

Since March 1996 house prices have been rising on a month by month basis, with 133 straight months of house price rises, which have seen the cost of properties in parts of the UK rise by around 200% in that time period. Officials from the Nationwide have stated that there are a number of factors that have contributed to the falling house prices, and this includes tight loan lending conditions, increased mortgage costs, and a reduction in demand from first time buyers.

The Chief Economist from the Nationwide stated: ‘April’s fall in prices continues the trend of the last six months and reflects the weakening sentiment in the market brought about by poorer affordability and tighter financial market conditions.’ A member of the powerful Monetary Policy Committee, which sets interest rates, recently stated: ‘A correction of approximately one-third in house prices does not seem implausible in the UK over a period of two or three years.’ He also said: "I am not suggesting that such a drop will necessarily occur, but it may. Cutting interest rates now may help to prevent such a dramatic fall."