Categorized | International

United Kingdom Home Prices See First Drop in Five Months

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The expiration of the stamp duty exemption continues to take its toll on the residential real estate market in the United Kingdom. Since the exemption ended, housing prices have faltered, though they hadn’t yet declined until this past month. Prices in the UK fell by two-tenths of a percentage point month-over-month in April. They were down nearly one percent from one year ago.

Buyers had rushed to buy homes just prior to the expiration of the stamp duty exemption, providing a false positive boost to the housing market. The market has quickly come back to reality, as factors such as tight lending conditions, declining consumer confidence, and high unemployment rates are negatively affecting the health of the real estate market.

Bank officials had considered offering a stimulus to help get the real estate market back on its feet. However, the stimulus idea led many to fear the possibility of inflation, and it was scrapped as a result. Many had worried that the UK residential real estate market would suffer, as the black debt crisis cloud hovered over the region. The economy is now in a double-dip recession for the first time in nearly forty years.

Economists believe that the residential real estate market in the United Kingdom has already experienced its strongest sales performance and pricing for the year. Lending conditions are expected to remain tight. Demand has declined, and it likely will continue to decline as the year goes on. More than half of economists believe that the housing market is currently overvalued in the United Kingdom, which leads many to believe that the market will see steeper price drops in the near future.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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