Prices in the US declined 1.7 per cent in the year to August 2006, the first recorded drop since April 1995, with the National Association of Realtors recording a 0.5 per cent fall in sales in the same period.
However, despite many features of the UK housing market ‘dovetailing’ with its American counterpart, most industry commentators believed the fall would not be replicated in the UK.
Sue Anderson, head of external affairs at the Council of Mortgage Lenders, said: “There is no automatic correlation between the US and UK markets despite global economic pressures playing their part. However, these have been factored into our forecasts and the underlying fundamentals which drive our market remain strong.”
The drop in sales was not as bad as US analysts had predicted but many voiced their concerns over a possible price crash across the American housing market.
Tony Capon, head of intermediary sales at Salt, believed the continuing issue of supply would maintain British prices in the ascendancy.
“We have seen rapid house price inflation and continued interest rate rises in the US over the last 12-18 months but this is more of an indication of the troubles in the wider US economy. In the UK, there is a continued shortage of housing and no indication of this changing. While we should see a slow-down in UK house price inflation over the next six months, you won’t see house prices fall like in the US.”
However, despite little respite for those looking to buy in the UK, Mark Sismey-Durrant, chief executive at Heritable Bank, believed those looking to invest in the US would will have a bright future.
“The reduction in prices makes the US a good buy when it comes to investing in property. If sterling and the dollar maintain their current relationship, it could open up plenty of investment opportunities, especially in places like Florida.”
