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| The decline of property value in the United Kingdom |
| Published on 10-11-2008 | Email To Friend Print Version
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Real estate hits a decrease in value of 1.9% in August 2008.
This drastic downfall in real estate value has evoked many dangers for the British economy. Market research illustrates that this fall of 1.9% in sales prices, for residential properties, guide the real estate in UK to the lower market level of the last 25 years. According to research conducted by “National Building Society,” the value of an average home unit in the United Kingdom has reduced by € 6100 in August 2008. As a result, referring to the annual value, from December 2007 the property worth has decreased by a shocking 10.5%. The figures illustrate that the property market is undergoing the biggest downfall recorded from 1991.
Market analysts who have observed the status of real estate worth have anticipated a fall and suggest that the property market must pass through a recession considering the previous significant increase in house value. This 10 year “Gold Period” showed an increase in property worth of over 300% it was inevitable that the status of the real estate value would eventually reach a recession.
There are several factors that have contributed to this downfall. The most significant cause is the relapse in the banking sector. Most banks are enforcing strict criteria when financing perspective buyers. Banks are demanding that purchasers contribute up to 25% of the value. The British economy is now under threat as many investors and market analysts are afraid that the real estate market will collapse and will endure the circumstances which occurred in the early 90’s.
The majority of the analysts reviewing the recession and the depletion in the British economy propose that the Central Bank of England must proceed with lowering the interest rates until there is evidence of progression regarding inflation control. For now the activities in construction have been frozen, regarding new developments. This produces a series of problems with unemployment, causing many labour and construction workers out of work.
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