Britain’s property boom has ended, according to the latest report from Nationwide Building Society.
As a result of slower economic growth and the impact of the credit crunch, house price inflation is likely to be set to 0 per cent with the possibility of a fall in some UK regions.
This is the latest in a series of latest knock-on effects from the US sub-prime mortgage debacle that has seen the UK suffer in recent months.
It follows last week’s warning from the International Monetary Fund (IMF) that Britain could face a property market slump as house prices are currently overvalued by as much as 40 per cent, thus predicting a slowing of growth over the coming months and possibly years.
Commenting on the findings, Fionnuala Earley, group economist at Nationwide, said: "We don't think the market will crash but prices are going to be flat next year. We had been saying for some time that rises in 2008 would be around the level of earnings growth, three per cent, but we now think they will be weaker than that."
During the last quarter alone, UK house prices slowed with figures between June and September dropping from 1.9 per cent to 1.6 per cent, making this the third consecutive quarter of slowing inflation. However the regional breakdown shows a slightly more mixed picture.
The findings have been backed by a report from Halifax which has indicated that while house prices have already seen a drop, they are still at an all time high – with the average sale costing around £200,000, more than double the figure from the last five years.
Despite the grim outlook, it appears that London is still the most popular region for investors and developers, regardless of the high prices.
In the ninth European Regional Economic Growth Index published today, London took the top spot for the second year running. The success is attributed to the strong employment growth in the financial sector and the work being undertaken in advance of the 2010 Olympic Games.
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