The average price of a home in Britain is £30,000 less than it was a year ago as prices fell by the largest rate in over fifty years. Nationwide, the country’s biggest building society, said that prices fell 14.6 percent over the past 12 months through the end of October, 2008. That leaves the average price at £158,872 as prices fell for the 12th month in a row.
Even though prices are significantly lower than they have been in recent years, transactions are at their lowest level since 1974. One reason for that, suggests Nationwide’s Fionnuala Earley, is the reluctance of many sellers to lower their price. Some seller were willing to cut prices, but, “While others refuse to cut their price, the levels of activity are constrained.”
Many economists predict prices will go lower, despite cuts in the interest rate by the Bank of England. The bank recently cut interest rates by 50 basis points to 4.5%, but that doesn’t seem to be helping the mortgage markets. Some analysts expect the bank to cut rates much further, even as low as 1%.
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