Britain's Nationwide Building Society's index of sentiment declined one point to 77, its lowest level since records started in May 2004. The result is based on a survey of 1,204 people conducted by Taylor Nelson Sofres from February 18 to March 20, 2008.
U.K. housing sector weighs
Economist Mark Chandler, based in London, told BloggingStocks Wednesday the fall in housing prices is beginning to weigh on U.K. consumer confidence. The average home price in the United Kingdom fell 2.5% in March 2008 to 191,566 pounds or $379,000, according to a survey by mortgage lender HBOS Plc., according to Bloomberg.
"Like America we've had an incredible run up of housing prices the last four or five years, and like America there were excesses, including a lot of curious mortgages and speculative activity," Chandler said. "But it appears the boom is over now, if the actual bubble hasn't already burst, and that reality is beginning to affect consumer confidence. There's definitely a more cautious stance toward housing, the economy, and regarding the prospects for growth now, as opposed to six months ago."
Lawson's comments
Further, Chandler said comments former finance minister Nigel Lawson, who served as Prime Minister Margaret Thatcher's finance minister from 1983 to1989, that the U.K., like the United States, is headed for a recession, also have contributed to U.K. residents' more-modest attitude regarding economic growth prospects, near-term.
"We aren't affected as much by oil price rises, but everything else, job growth, the ability to secure a mortgage . . . they're all affected by the economic downturn," Chandler said. "Lawson's comments have tended to cause people to reassess expectations. People are becoming more cautious regarding major financial decisions, and no one is simply throwing money at housing anymore, and that's beginning to show up in house prices."
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