The U.K. Housing Market: A Mix of Demand, Declining Prices–And a Possible Slump?
- May 15, 2008
It looks like the housing trouble across the pond is growing–could it echo the U.S. housing decline in a matter of months?
Maybe. The housing market in the U.K. has been slowing for awhile–and just yesterday, the Royal Institution of Chartered Surveyors
(RICS) released survey results that showed 95.1 percent more surveyors found home prices had fallen, rather than risen in April–a 79.4 percent increase from March.
And today, one of the biggest U.K. builders, Redrow, became the first to cut jobs because of the decline, according to the Telegraph. Redrow to date has axed 15 percent of its staff.
Even the government is beginning to acknowledge the problem–albeit begrudgingly. Prime Minister Gordon Brown promised this week to help first-time homebuyers in Britain by offering 100 million pounds ($190 million) for low-income buyers to purchase homes through shared-ownership
He also pledged that the government would buy 200 million pounds-worth of unsold new homes and rent them to financially troubled residents Bloomberg reported Wednesday.
Yet that offered little hope to a country that heard earlier in the week (courtesy of RICS) that the housing troubles had spread to all regions–and found out the full extent of the government’s concern over the market issues when housing minister Caroline Flint was photographed walking into Downing Street holding papers that read "We can’t
tell how bad it will get."
(A note to Flint: It just got worse. Invest in a folder.)
And many feel the housing decline will, in fact, get very, very bad. A recent Reuters poll of 30 economists, analysts and fund managers found they feel property prices will fall at least 5 percent this year–possibly twice as much.
Like the U.S., the U.K. is suffering a correction of sorts after some areas, like London, saw huge gains in recent years; but the country is also undergoing a widespread property shortage–the government plans to build 2 million new homes by 2016, although it is already behind on its 240,000-a-year goal, according to the Independent–and it’s not clear how its housing decline will play out.
One thing is for sure: The current U.S. housing troubles are on the minds of most U.K. real estate industry members. How could they not be?
The question is, how can the U.K. property market learn from our mistakes–and there were some big ones–to prevent history from repeating itself overseas?
What would you advise U.K housing officials and builders to do in order to ward off a prolonged housing slump?