A report in today's Telegraph indicates that the UK's housing slump continues. According to the Nationwide house index average prices fell 1.3% in January, giving a 12 month decline of 16.6%.
The news comes a day after the International Monetary Fund (IMF) reported that the UK's recession will be worse than for any other major economy. The logic is simple. The financial services sector is a bigger proportion of UK GDP than for any other major economy. Secondly, we have had one of the biggest housing price booms. Therefore, more of our people will be thrown out of work and more of us have personal wealth tied up in the housing sector. The decline in financial wellbeing tends to lead to a downward spiral; as people feel less well-off, they spend less money, leading to less economic activity.
The Nationwide report wasn't all doom and gloom. It refers to the level of economic stimulus provided by various government initiatives. Indeed some house builders report an increased level of buyer interest compared to the latter part of 2008.
