UK property prices dropping like Gordon Brown’s approval rating
Anybody deluded enough to hope for a property market recovery sometime this year will be sorely disappointed by the latest figures from the Land Registry which show that actual selling prices of homes in the UK fell by 2% in February.
This means that the rate of decline is actually accelerating, and the average price of a UK home now stands at a shade under £154,000. There were 42,000 completed sales in February, roughly half the number for the same period a year ago.
You can forget all those ridiculous feel-good stories about ‘increased buyer enquiries’ and ‘higher asking prices’ – the Land Registry figures show the actual number of sales, and the real value of those sales – these are really the only numbers that matter if you want to accurately assess the state of the British property market. And the accurate assessment of these figures is that the housing market is screwed.
With prices falling at this pace, only a fool would consider getting onto the property ladder (even if they could persuade any bank to give them a first time buyer mortgage) – who in their right mind would want to buy a house that will most likely be worth 10% less within six months?
It’s not just the housing market that’s collapsing at a record rate – the latest Gross Domestic Product figures show that the British economy shrunk by 1.6% in the final three months of 2008. Not only was this fall worse than the 1.5% widely expected by the men in suits, it also represents the biggest quarterly drop in GDP for 30 years in the UK.
The bigger than expected drop is being blamed on the collapsing construction industry. All this just goes to show the stupidity of building an economy which depends on constantly booming property prices. Quite apart from the human cost of ordinary people being unable to afford to put a roof over their family’s head, it means that when things inevitably go tits up it has a huge impact on the rest of the economy.