Last month I said we may see year over year declines in UK home prices as early as April. That turned out to be correct as the latest figures from Nationwide show that UK Home prices fell for the 6th consecutive month and showed year over year declines for the first time since January 1996. From Nationwide:
• The price of a typical house is now 1% lower than this time last year
• The Bank of England’s Special Liquidity Scheme should help to improve wholesale markets
• More than 5 million borrowers have directly benefited from Bank of England rate cuts
Commenting on the figures Fionnuala Earley, Nationwide's Chief Economist, said:
“April was another difficult month for the housing market. Falling levels of market activity meant that prices fell by 1.1% during the month and ended up 1% lower than this time last year. April’s fall in prices continues the trend of the last six months and reflects the weakening sentiment in the market brought about by poor affordability and tighter financial market conditions. This is the first year-on-year fall in prices since March 1996 and brings the price of a typical house to £178,555, £1,759 lower than at this time last year.
Year over year declines in UK home prices are here to stay for at least a year but probably longer. Year over year declines persisted for more than 3 years in the early 1990's, that was also the time of the last UK recession. If you believe the current housing bust to be worse that the late 80's early 90's experience, (which it most certainly is in the US) UK home prices are unlikely to rise for quite some time.