As we can see from the provided graph, the house prices in UK dramatically fell from January 2008. There are several factors which lead to this decline of prices in housing sector; one of them is the credit crunch. According to ex-Prime Minister Gordon Brown the UK was feeling the impact of problems from the global credit crunch (www1). Average prices fell by 0.4% in December 2007, leading the annual inflation rate down from 8.1% in November to 6.7% in January 2008 (www2). According Land Registry the December fall was the first decline recorded since August 2005 (www2). Council for Mortgage Lending stated that gross lending was £22.6bn in December 2008, down 25% from November previous year and the lowest monthly figure since May 2005 (www2). That means that the problems in the credit markets sector were still limiting lenders' ability to advance money (www2).
As we can see from the graph between June and July 2008, the percentage of the house prices crossed from positive to negative. According to Halifax the UK's biggest mortgage lender, UK house prices fell by 2% in June (www3). The drop meant that prices were 6.1% lower than a year ago, with the average home costing £180,344 (www3). Also Halifax stated that the annual rate at which house prices fell was at its greatest level since March 1993 (www3). The other giant mortgage lender Nationwide stated that the price of a typical house fell by 1.7% in July, bringing the annual fall to 8.1% (www4). This brings the average price to £169,316, almost £15,000 less than in July previous year and its lowest level since August 2006 (www4).
The graph shows us that the house prices in UK were going downwards from the January 2008 until the April/May 2009, in total of 15 month. According Halifax, UK house prices rose by 2.6% in May compared with April but activity remains low in the market (www5). The figures showed that the average UK home at that time cost £158,565 (www5). The Bank of England reported that... [continues]
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