Confidence in housing takes a dive; Boom is over as interest rises bite.
CONSUMER confidence in the housing market in Wales has slumped by 11% -- the biggest fall anywhere in the UK this month.
The Woolwich survey, combined with mounting evidence that house price increases have slowed dramatically, suggest the housing boom has run its course.
In the last 12 months, Welsh house prices have risen by more than a third.
Just over half of Welsh homeowners believe their property will continue to increase in value compared to 66% in July -- the largest month-on-month drop since 1998.
It said the fall showed the Bank of England's recent interest rate rises are making a significant impact.
Andy Gray, head of mortgages at Barclays and The Woolwich, said: ``This confirms our prediction of a downward trend, which we expect to continue at a slower rate until the end of the year.
``After bucking the trend in recent months, Welsh confidence is now falling into line with the rest of the UK. ''
Barclays and The Woolwich anticipate a further 0. 25% interest rate rise by the end of this year, taking interest rates to 5%.
House price growth remained subdued during September as the market continued to show signs of slowing down. Growth remained strongest in Wales where house prices are now 34% higher than they were a year ago.
Nationwide said it now expected price growth to remain ``muted'' for some time as the market adjusted following four years of double-digit price increases.
But it stressed it was not predicting a widespread slump in prices as the outlook for both the economy and employment remained good.
The average cost of a home across all regions of the UK is now pounds 153, 727.
n Sudden changes in the housing market pose a big threat to the UK economy, the International Monetary Fund warn. Potential house buyers should ``exercise caution'' when prices go too high, the economic watchdog said last night.
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|Publication:||Daily Post (Liverpool, England)|
|Date:||Oct 1, 2004|
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