| House prices in 1.3% fall in April |
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| Friday, 02 May 2008 | |
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Page 2 of 2 Modest rise in unemployment The UK economy is forecast to slow during the course of 2008, recording below trend growth for the first time since 2005. Halifax expects there to be a modest rise in unemployment later in the year due to this easing in growth. The scale of the increase in unemployment is unlikely to cause widespread difficulties for households. More Bank of England interest rate cuts are expected over the coming months as concrete evidence of an economic slowdown accumulates. This evidence will help to allay the MPC's concerns regarding inflation over the medium term, providing scope to lower rates. The Monetary Policy Committee is nonetheless expected to maintain a "gradualist" monetary policy stance, lowering rates at a steady pace. The number of housing transactions in recent years has been significantly lower than at the height of the late 1980s housing boom. There were 1.17 million house sales in England & Wales in 2007 and an average of 1.16 million in the last three years (2005-2007). This is nearly a third lower than in 1988 when there were an estimated 1.7 million transactions. First time buyers Transactions have also been significantly lower as a proportion of the housing stock in recent years; averaging 7 per cent during 2005-2007 compared to 12% between 1986 and 1988. The number of first time buyers (FTBs) has also fallen sharply in recent years. An estimated 300,000 FTBs entered the market in 2007, the lowest since 1980. This compares with an estimated 900,000 at the peak in 1988. FTBs have also declined sharply as a proportion of all borrowers taking out a new mortgage to finance house purchase, accounting for 30% in 2007 compared to 51-52% in 1989 and 1990. FTBs accounted for 14% of all new mortgages - including remortgages - in 2007 against 45 per cent in 1993, the earliest available data on this basis. Buyers have been putting down bigger deposits than in previous cycles. The average deposit put down by FTBs in 2007 (£34,381) represented 20% of the purchaser price compared with 12% in 1989. Related articles
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