A couple of months back I noted on a previous post on UK Home prices that you should expect year over year price declines to exceed -10% before the year is out. Once again I've been too optimistic. UK home prices fell a further -1.9% in August bringing the year over year decline to -10.5%.
According to Nationwide, the average price of a UK home fell almost £5,000 in August. Home prices are down -11.5% from the peak in October 2007. Unlike the Case-Shiller index in the US, the trend in the UK doesn't look like slowing.
Whilst declines are only approximately half of what has been seen in the US, the UK declines have reaccelerated. Year over year declines could easily top -15% by the end of the year.
Is Australia poised to follow suit? Remember US home prices peaked on a national level around the middle of 2006, UK home prices didn't peak until October 2007. ABS data suggests Australian home prices peaked on a national level sometime in the first or second quarter of 2008. If double digit declines are in the cards for Aussie home prices, we're unlikely to get confirmation of it until well into 2009.
Thursday, 28 August 2008