Home sales in the UK during March-May 2008 fell to a three-decade low due to stringent lending conditions, higher interest rates and spiraling fuel and food costs.
According to the Royal Institution of Chartered Surveyors (Rics), home sales in the UK reached its lowest level in the three decades during March-May 2008 as realtors sold an average of 17.4 properties during the period, as reported by Finance Markets.
The figures points to a 32% crash compared to the same period last year (March-May 2007). The home sellers in Wales and England failed to achieve sales target in the most hostile market scenario in last 30 years. The total number of properties put on the market for sale also fell down for the fifth month in a row (May 2008).
The slowdown in the housing market in Britain has mainly been grounded on higher interest rates for house loans by the Bank of England, which rendered consumers incapable to decide on buying their first house or property. Moreover, the housing contracts inked by the new home purchasers faced problems of lesser money as they had to give larger deposits. In addition, it was difficult for the first time buyers to get funds for buying homes; as a result, the home sales in Britain dove to the lowest level.
The UK housing industry also slowed down due to rising inflation caused by the spiraling costs of gas and food across the world, which is discouraging customers to invest money in the housing industry.
Also, slump in the housing industry was a result of ongoing economic slowdown in the country, which was further aggravated by the stringent lending terms for home loans. The implementation of stringent lending conditions by financial organizations caused a fall in house sales as these institution raised the interest rates in proportion to deposit amount. Consequently, the home sales in the UK dropped significantly.
A Senior Research Analyst at RNCOS opined, “The UK housing industry sales dipped to a three decade low due to unfavorable business conditions in the country. If the slowdown continues in future, it would affect the construction industry and employment conditions. The fall in housing industry will force home developers to cut down the staff level, which, in turn, will badly affect the entire British economy.”
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