Tuesday, November 20, 2007

International Housing: Home Prices Drop in U.K.

The housing tumble is not a phenomena contained to the U.S.; the housing prices in the United Kingdom dropped in the most recent report. The U.K. market shared many undesired similarities with the U.S. market over the past few years; weak lending standards, out-of-control speculation, rampant price increases, a bank-driven secondary derivative market for mortgages, and other disconcerting parallels.

Resembling the U.S., the situation is now coming home to roost in the U.K. Many British banks are under pressure from mortgage defaults and there is an increasing likelihood that several will have to be bailed out; potentially leading to more bank runs similar to the recent panic where British mortgage lender Northern Rock PLC saw unnerved customers withdraw billions of pounds from their accounts.

U.K. Home Prices Fall; Sellers Told to Ask for Less
U.K. home values dropped this month in every part of the country except London and sellers shouldn't hesitate to reduce prices further because a more protracted slowdown is on the way.

“If you have to sell, then seriously consider dropping your price and taking an offer now rather than holding out,'' Miles Shipside, commercial director at Rightmove, said in a statement. ``You could be offered even less in a few months. Prices are set to flat-line.''