Home Values Plunge in Britain

House prices in Britain have fallen by £15,489 on average since their peak last summer and are now falling at their fastest rate for at least 25 years, the Telegraphreports. At current exchange rates, that’s an equivalent drop of us$30,572. Economists are saying the slump could be turning into a “rout.”

Figures from Halifax, the country’s largest mortgage lender, show that Britain is in the grip of a major house price slump, with economists saying there is now a risk price falls are turning into a “rout.”The warning came as the Bank of England failed to cut interest rates, leaving base rates on hold at 5 percent with little sign that home owners will be given any comfort before the end of the year.House prices have fallen by 3.8 percent on an annual basis, according to Halifax, and are now 7.8 percent below their peak level in August last year. This equates to a drop of £15,489 for the average home since last summer and marks the largest percentage drop, on a nine-month basis, since Halifax started collecting data in 1983.

Home values are plunging everywhere in Britain, including in high-end districts like central London. The Telegraph quoted Howard Archer, chief economist at Global Insight, as saying, “When the falls are this sharp, there is … undoubtedly an impact on consumer spending. Quite simply, people feel less wealthy. And that can be damaging.”

In a faulty economy built on credit and consumption just as in the United States, the UK housing rout could be progressing toward outright economic disaster.