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The UK housing market

Written by A Forex View From Afar on Tuesday, May 13, 2008

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If bad news about the US housing market is not something new, and US equities appear to be “bulletproof” from the consequences of more bad news, for some the bad news regarding UK’s Real Estate sector is fresh news.

US Single Family home prices have dropped the most since 1982, the National Association of Realtors reveled today; it would have beaten the 1982 numbers too, but there is not any data beyond that year.

On the other side of the Pond UK Real Estate is in better shape them the US, it seems. Year over Year, the prices are still positive, which the US cannot say.

From last year prices across the UK had climb 5.2%, down from 11% in July 2007, but for the City of London, known for its dynamic market, prices have gain only 7% from last year, after recording a 20% gain last summer .

UK Housing Market

It is pretty obvious things could have been worse, but UK home prices have had important declines. The worse part is in the RICS Housing Market Survey, it revealed that a staggering 95% of respondents have reported a drop in prices, for the ninth consecutive month, and the first month when all areas reported price declines.

Even if demand is weak, due to tight credit conditions, the same survey reveals that the housing supply is quite limited, making the downturn look better then past demand slumps. Usually a small supply is a big advantage when dealing with a slowdown in the housing sector, making things easy when buyers eventually appear into the market.

Unfortunately the Bank of England cannot cut as much as the Fed did- the newly releases CPI numbers stand at 3.0%, and therefore will not allow the Central Bank to loosen their monetary policy. With the new highs made last week in Oil prices, the CPI has some more room to run to the upside.

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