The value of residential real estate in the UK has held up better than may have been expected at the beginning of the financial downturn, one expert has claimed. Economics editor at the Sunday Times David Smith made the comments at the British Council of Shopping Centres (BCSC) conference and exhibition, stating "the picture for house prices has not been that bad". He explained that despite values falling by an average of 20 per cent initially, they have since rebounded by around ten per cent.
Mr Smith noted that one key difference between the recent economic crisis and the one that hit the country in the early 1990s is the lack of forced sellers in the market place. He pointed out that increases in unemployment were not as severe as had been predicted, which means fewer homeowners have been in a position where they need to sell as they can no longer keep up with repayments.
But the property industry is suffering in terms of the levels of activity, with far fewer transactions taking place, in part due to restricted mortgage availability. Mr Smith is not so optimistic on this point, commenting: "I don't think we'll get back to where we were before the crisis, but gradually we will move back to approach some mid-level [activity]." Earlier this month, the Royal Institution of Chartered Surveyors (Rics) UK Housing Market Survey for August showed that fewer sales were finalised than in July.
In fact, the Rics figures revealed that activity levels have dropped back to those experienced in June 2009. According to the findings, economic uncertainty and limited finance are the key issues depressing the residential real estate sector. Alan Collett, a spokesperson for the organisation, warned: "The risk is that the worsening economic picture will gradually begin to have a more material impact on sentiment and discourage potential house purchasers, even where mortgage finance is available."
- Tuesday 27 September 2011