Property Prices to Continue Their Decline – NIESR

Bloomberg reports that the latest research performed by the National Institute of Economic and Social Research (NIESR) suggests UK house prices will continue to decline until the year of 2012. According to the research, the decline of property values is expected to resume as the latest improvement was caused by a limited number of properties up for sale and by limited mortgage availability, which fell by 65% compared to the previous year rather than by improved financial conditions. Moreover, the London-based research organization predicts that the country’s gross domestic product will decrease until the 4th quarter of 2009. Simon Kirby, economist at the national Institute of Economic and Social Research told Bloomberg reporters that the organization does not think that the talks about economy stabilization and recovery will turn out to be true in the near future. According to NIESR, UK property market will only witness growth in the year of 2012. Meanwhile, the report of the Bank of England, published last week, suggests that mortgage lending the UK might improve in the coming months; at the same time, the report of the Nationwide Building Society along with other British lenders reveals that property values rose in the summer months, in June particularly. Despite the good news, the British economy still has a long way to go to recover from the recession, which was a bad as the one of 1958. It should be noted that it was stated in the report, published by the National Institute of Economic and Social Research – country’s most reputable research agency, the clients of which include the British Treasury and the Bank of England – that the rise in property values is to be considered to be temporary as it was caused by limited supply. NIESR report also highlighted that declining property values in the UK are expected to hurt consumer spending in the coming years. The agency predicts that limited consumer spending coupled with unemployment will result in the highest level of household savings ever since 1997.