The flat performance of Britain's real estate market in 2011 is likely to continue this year, as the house prices kept dropping in most parts of the country amid a weak economic climate both in the country and in Europe as a whole.
Uncertainties in the eurozone economy, high unemployment, and dwindling incomes of British citizens driven by a combination of inflation and low wages rises suggested a stagnation of the country's housing market.
Britain's house prices dropped by 0.2 percent in December last year compared with the previous month. However, year on year, housing prices had increased by one percent in 2011, said the building society Nationwide in its latest report.
"The one-percent rise in house prices recorded over the past 12 months could hardly be described as a strong performance, but against a backdrop of anemic economic growth and a deteriorating labor market, Britain's house prices were surprisingly resilient in 2011," said Nationwide's chief economist Robert Gardner.
Gardner predicted the same low level of activity as in 2011 was expected this year, although the outlook would depend "crucially" on how the British economy performed.
According to Nationwide, the average house price in Britain is 163,822 pounds (about 254,000 U.S. dollars). The figure is calculated using its own mortgage data.
However, the house price varied considerably geographically. Prices in the country's capital city of London rose in 2011, but dropped sharply in Northern Ireland. Northern Ireland saw an 8.7-percent fall in house prices in 2011 while London saw a 5.5-percent rise over the year.
Britain's property analytics business Hometrack was also not optimistic about house prices in 2012. It offered same figures for Britain's housing market in 2011.
With the British economy struggling to gain momentum, labor market conditions are likely to remain challenging for the housing market in 2012, deterring buyers from entering the housing market, according to Gardner.
However, there is still a positive side in the picture. According to Nationwide, there are few indications that a flood of properties is about to hit the market, so tight supply conditions will continue to provide some support for prices. |
