UK: Is The Housing Sector Really Bottoming Out?

Daily Forex Fundamentals | Written by ecPulse.com | Apr 30 09 10:18 GMT |

Today in the United Kingdom we saw that after house prices were starting to show some recovery as they rose in March yet declined in April based on readings from the residential property market while Gfk NOP reported that consumer confidence spiked in April. Nationwide Building Society released its house prices seasonally adjusted for the month of April coming in at -0.4% higher than the projected reading of -1.2% yet worse than the prior reading of 0.9%. On the year the index rose to -15.0% from the previous -15.7% while it was anticipated to come in at -15.8 percent. The monthly decline jolted some of the hopes that were in the market that the housing sector is bottoming yet the annual increase is supporting the fact that Britons are starting to take advantage of the downfall prices as they begin to buy homes. There are other factors that are pressuring the housing market like the worst financial crisis since the Great Depression which resulted in a rigid lending system causing banks to hog all the cash therefore not lending to Britons which means that home seekers struggle to gain access of loans. Also it is not just the considerable strain in the banking system but also the with unemployment rates at 6.7% the highest since Prime Minister Gordon Brown has been given the power to become the new elected government. The mounting of job losses is weighing on the housing sector because Britons do not have enough cash to make such a huge purchase. The government has already exhausted all measures as they continue to inject cash in the economy as a way to fight the worst economic growth since World War II while the Bank of England reduced their interest rates to 0.50% the lowest since the bank's creation in 1694 along with quantitative easing as they buy gilts with newly printed money. In other news, the Gfk NOP released its survey regarding consumer confidence showing that it rose to the highest level since April 2008; the index showed that confidence climbed to -27 in April from the prior -30. Gfk also released its index of consumers' outlook of the economy rising to -15 from -31. The rise in the index shows that Britons are gaining some optimism that the pace of the global recession is easing which means that a recovery will happen yet on the long run they are still optimistic because as we know that main sectors that fuel economic growth are still contracting. From the tumbling sectors, resulted in the gross domestic product (GDP) reading for the first three months of this year to contract by 1.9% to mark the worst quarter since 1979. The softening of the job market, falling home values and the worst credit crunch since the early 1930's are all factors that are pushing the United Kingdom towards a long and painful recession. Turning to the stock market we see that it is trading in the green as investors are optimistic that global downturn is coming to an end. The FTSE-100 index as of 10:02 GMT gained 79.89 points or 1.91% to 4,269.48 points. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk