Rates derail UK property boom

British house prices fell at their sharpest rate since the recession of the early 1990s in the three months to October, a survey revealed this week — the latest solid evidence that the housing boom in the UK is over.

The Royal Institute of Chartered Surveyors said 41% more of their members were reporting house price falls than rises, pushing down their seasonally adjusted house price balance to -41 in October from -30 in September.

This is the lowest balance since December 1992 when the last British housing market bubble burst, trapping millions of people in negative equity.

The survey is one of the clearest signs yet that five interest rate increases in a year and tough talk from the Bank of England have stopped the rampant British housing boom in its tracks.

The number of new buyers also fell sharply and the number of sales were down by a whopping 25% over the past year to their lowest level in nine years.

“Additional uncertainty has been injected into the market by continued speculation over the potential for more serious declines in prices,” the report said. British house prices have experienced double-digit inflation since the late 1990s, which has more than doubled the average price of a home. They are a closely watched indicator in a country where two-thirds of households own their home.

Article by: Staffer - www.netassets.co.za