The housing market should remain buoyant, despite concerns the UK is entering a period of recession,...
The housing market should remain buoyant, despite concerns the UK is entering a period of recession, according to Halifax.
Martin Ellis, group economist at Halifax, said although the economy is not heading for a full-blown recession, spending may be affected. He added: 'This is more of a slowdown than a recession. The service industry, for example, is slowing. This could have an adverse effect on consumer confidence and unemployment could rise later this year.'
Ellis said this will have an effect on the housing market but emphasised that it is far from critical. He said: 'We are not heading for a boom and bust. House prices have been rising by 10% a year and this is likely to halve to 5% next year. House prices will grow but not as fast.'
Manufacturing is now officially in recession, with output falling for the second successive quarter. Output from the sector rose slightly in June but fell by 2% over the quarter ' the worst for 10 years. The Government is now predicting manufacturing is set for a fall of 5% a year.
The news has prompted fears that job losses could spread into the services industries and dampen spending. This concern has been vindicated by new data from the Recruitment & Employment Confederation, which claims job advertising in national newspapers fell by almost 20% in the year to June ' again, the worst fall in 10 years. The Government's concerns were made evident in the latest quarter per cent interest rate cut.
Alex Bannister, group economist at Nationwide, said problems in manufacturing have already taken their toll on property prices in the industrial parts of England. He added: 'The Northeast, Northwest and Scotland have already seen slower growth than the rest of the UK.'
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