UK house prices continue to fall

The month of May has proven to be a dark one for house prices as they fell the most in 15 years in May.

Lenders continued to tighten mortgages restricting the movement of housing units, and the availability of potential buyers causing as stagnation in the market.

As a result, the cost of an average home dropped 3.8 percent to 184,111 pounds.

HBOS unit Halifax’s housing market survey indicated that predictions of a 3.5 percent drop were expected. The survey revealed that the fall in prices is due to a combination of the bubble bursting as the ceiling has been reached on price rises.

Furthermore, the lack of availability of credit has limited potential buyers spending power and limited the market.

This also ties in with the latest data and reasoning the equivalent survey from Nationwide Building Society which was published last week. These continued and publicised falls in prices has meant that Global Insight has now revised down its forecast for house prices.

The scope for borrowing and an increase in the availability of credit has been quashed today as the BoE has decided to keep the benchmark interest rate at 5 percent.

It seems now as though UK housing market is heading for its biggest downturn since the 1990s, and due to its importance in the UK economy and consumer psychology is pulling the economy down with it.

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