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House prices plunge a record 15.9%
6 January, 2009
Nationwide reports biggest annual drop ever, with the average UK price falling £29,000 in a year
House prices plummeted 15.9% last year, the biggest annual drop on record, according to the latest survey from the Nationwide building society.
Today’s figures show that UK prices fell by 2.5% in December alone, the 14th consecutive monthly drop, taking the average house price down to £153,048.
The average property is now worth £29,000 less than a year ago and 18% less than it was at the peak of the boom in October 2007.
Fionnuala Earley, chief economist at the Nationwide, said 2008 was a “year of turmoil” and the speed of house price falls has defied expectations.
“The disruption in the financial markets worsened throughout 2008 and had larger implications for the real economy than we anticipated a year ago,” she said.
Earley said prices are expected to carry on falling as mortgage approvals and public confidence continue to plunge.
She said: "Until the economy and the labour market stabilise, it is hard to imagine households becoming upbeat about the immediate future for house prices and this will hinder the pace of recovery."
A report from the Halifax last week similarly reported that house prices dropped by 16% in 2008.
Readers' comments
When Gordon Brown publicly stated 2 years ago that house prices in the UK were overvalued by almost 40% I think those with any common could of predicted the current situation. I'm glad the drop in values has burnt the fingers of all those greedy buy to let landlords whos rental incomes no longer cover the mortgage cost of the property and are now forced to try and sell with negative equity.
Well Johnno, you quite obviously don't have a mortgage of your own or the 'common' to realise that this doesn't just affect buy to let landlords, but those of us who bought properties well before any of this happened and are still feeling the bite.
The house prices are dropping for many different reasons, and those who can't afford their mortgages because of redundancies and many other 'job re-assignments' will be hurt far more than any buy-to-let landlords falling into negative equity.
Fionnuala Early is either the worst 'economist' or the best 'spinner' who ever worked for a vested interest, although she has been strugling recently, so I suspect the latter!
What's happened to the soft landing, negative plateau, olympic effect and UK housing shortage now Fionnuala?
Johnno - How are those "greedy" buy-to-let landlords any different from folks who invest in stocks or shares? Surely the intention is merely to provide a future stream of income?
The negative equity is stopping people on low incomes disposing of their properties as the mortgage payments become too much. They then lose their homes, pushing down the prices further.
The only people I'm glad to see burned are the property developers who are left with a surplus of tiny city centre flats, for which there was no market demand in the first place. "City-Living Concept", yeah right!
It would be interesting to see these figures broken down into 'normal' sale ie willing buyer and seller and forced sale ie repossessions. If the rest of the country are seeing the same as we are in the north east, repo sales (especially on new/recent developments - and not apartments) are being bundled through at 30-50 percent less than the next door equivalent. So much for best price...
Gavin, I agree with some of your comments - but to say that "The only people I'm glad to see burned are the property developers who are left with a surplus of tiny city centre flats, for which there was no market demand in the first place" is really a non-starter. If there was, as you suggest, never a demand then NONE would have been sold. Period.
As it is, it is only the late entrants who have been caught with stock - and these are mainly the little players who cannot afford to carry stock (and, no, before you suggest - I am not involved in 'City Living'. Never have been.)
We would all prefer to be building sprawling estates of cheap three-bedroom semis in areas where everybody wants to live - but that period is loooong gone.