Thursday, April 23, 2009
Category:
Property
According to Nationwide, the housing market is continuing to experience house price falls.
In February the reduction stood at 1.8 percent compared to the month before, which resulted in an average property price of £147,746 compared to £150,501 in January. Falling rates are reported to reduce existing variable rate borrowers monthly repayments by a third and for would be first time buyers, a major improvement in affordability is apparent.
Nationwide's Chief Economist, Fionnuala Earley, commented: "The price of a typical house fell by 1.8% in February, bringing the annual rate of change to -17.6% and the price of a typical house down to £147,746, from £179,358 this time last year. Sharp cuts in interest rates have helped affordability, but have not yet affected housing market confidence sufficiently to boost the levels of new transaction activity or slow the pace of house price falls. Early signs of increased interest in housing, as reported by the pick up in new buyer enquiries, have yet to filter into sales, but do suggest that falling prices and interest rates are raising curiosity now, which could flow through quickly once confidence returns.
"The February Inflation Report also implies that the MPC has not finished cutting interest rates yet. First, the Bank's economic forecast factoring in a 25bp cut, left inflation significantly below its target two years ahead and GDP contracting sharply. Second, Mervyn King clearly stated that "further easing may well be required" when asked how much further rates could fall - a sentiment subsequently echoed by other MPC members. Further cuts in rates will be welcome in the housing market, but the economic conditions that require them will mean that there is unlikely to be a swift turnaround in the housing market in 2009.
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Homeowners who have decided to sit tight in their current property rather than move, may wish to consider taking out a secured loan to turn their existing home into their dream home. A secured loan for
home improvements could be used to finance a new kitchen or bathroom, or could even be used to create extra space by means of an extension or conservatory. Such projects could even add value to a property in readiness for a potential decision to sell up in the future. Secured loans are one of many options to fund home improvements.
