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UK House prices Drop Further

House prices fell again in September with unsold stocks still at record levels. Estate agents surveyed by property website Right-move reported asking prices fell by 1.1% in September, reducing the average house price to £229,767. Estate agents are generally of the opinion that unsold houses are still overvalued by owners who don’t have a realistic view of the current market.

Prices have now fallen by 3.4% in the last three months, half way towards wiping out the gains made in the first six months of the year. Over the past 12 months prices are still up by 2.6%.

September saw a slight slowdown in new properties coming onto the market. An average of 26,087 properties a week came on, the lowest weekly run-rate since April. This is also down 11% on the 29,220 recorded in the August index.

All house price data is showing a marked slowdown in the number of sales and both the Halifax and Nationwide show house prices are not rising as fast as anticipated. The UK’s heavy reliance on the housing market has affected Sterling’s value this morning against most of the major currency pairs.

The pound is still in a technical uptrend against the USD with stops around 1.5550 GBP/USD, short term sellers are cashing in before the anticipated rise to 1.600 GBP/USD. Euro buyers are mostly out of the market, taking advantage of the 1.200-1.2200 GBP/EUR rates seen over the past few weeks, Euro sellers are hanging on for a renewal of the downward trend and targeting 1.1750 GBP/EUR range in the short term.

Australian rate swaps rose and bank futures fell after the Australian central bank chief said it is ready to use interest rates to manage an expected strong pick-up in domestic activity, suggesting an increased possibility of a rate rise in the near term.
Higher interest rates have helped the Ozzy dollar to stage a rapid rise in strength over the past 2 years.

A Credit Suisse gauge of rate expectations is pricing in more than 30 percent chance of an interest rate rise at a review in October compared with a zero percent probability earlier this month.

This has also helped the Australian dollar to gain over 1% against the pound during Asian trade, it has also managed a 1.5% rise over the greenback rising to the 5 year high of 0.9477 AUD/USD breaking above this level today will be very bullish for the Ozzy across the board.

Our Australian dollar sellers are hanging on for better rates in the short term and advise to buyers is to beware further decreases in the rate of exchange especially in light of this latest central bank statement.

Looking forward to the week ahead the markets are awaiting the Fed’s rate decision and statement tomorrow evening. Ears will be very keen to hear the rhetoric regarding further monetary easing in America in the form of QE.