uk housing market ends 2009 and starts 2010 on high notes
News Posted On: 05 January 2010
As 2009 drew to a close the Nationwide confirmed what we already suspected. Doomsayers calling for a continuing UK real estate crash last year were going to be proved badly wrong. Instead house prices closed 2009 nearly 6 percent higher according to Britain's biggest building society.
Perhaps its not yet time to pop the champagne corks. The December monthly rise of 0.4 percent was the smallest since April. A potential dark cloud on the horizon is the 2.5% VAT increase as 2010 starts. The government will doubtless have to rein in spending to cut public debt, and the price of the average British home is still 12 percent below its peak.
However, few home-owners at the beginning of the year would not have settled for a mean rise of nearly 9 percent from February 2009 as the recession bit hard.
The eighth straight monthly rise recorded in December took the average house price to 162,103 pounds. Furthermore the uptrend could extend as credit conditions loosen in 2010. Private citizens in the UK have been paying down debt on balance, and coupled with the brightening economic outlook this means mortgages should become easier to obtain, especially as defaults on house loans have been far lower than lenders had bargained for.
Official figures released on Monday – the first business day of 2010 – showed November 2009 UK home lending at its highest value since March 2008.
The Bank of England reported 60,518 mortgage approvals in November, up from the previous month and more than double the low of 27,162 set nearly 2 years ago.
"The figures have surprised positively," said Amit Kara, economist at UBS. "They are consistent with our more constructive view on UK housing as well as for overall economic growth this year."
Other positive numbers just released include money supply – it is expanding. Add this to a surprisingly positive manufacturing survey and it's beginning to look as if the Bank of England may not have to extend the 200 billion pound quantitative easing due to end next month.
"It's been a strong start to the year for UK domestic data," said Philip Shaw of Investec.
On Monday the Stock Market obligingly closed on a new 12 month high.
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