Why did the house prices drop in Barking in 2008?

In 2008, house prices in Barking took a dive. This was due to the nationwide decline, which saw house prices falling by over ten per cent in some areas with the average price coming down to around £150,000. Of course this wasn’t a unique situation in the UK as the global financial crisis saw the once booming property market suffer a dramatic downturn. “We did not anticipate the speed of house price falls or the extent of the global and domestic economic slowdown,” said one Nationwide expert on the unfortunate turn of events.

However, Barking as well as Dagenham had seen some of the worst declines amongst other boroughs in London. While house prices dropped ten per cent in these areas, the UK average was 8.1 per cent according to surveys conducted by Hometrack.

The lowest prices found in Barking and Dagenham were £143,900. Seema Shah of London property experts London Economics spoke with the BBC at the time, explaining the different price drops across the city. “In the top end of London’s housing market transactions of homes priced over £2 million were 53% lower this August [2008] than in August last year,” she said.

The cheapest boroughs in London found themselves below the £175,000 stamp duty threshold. The root of the problem could be found in buyer confidence. Potential home buyers simply did not feel safe and secure in buying a home at this time and just as we were on the edge of the worst economic crisis in generations, banks were not eager to lend.

Other experts coupled this lack of consumer confidence with the growing rate of unemployment at the time, which of course has a direct effect on how people spend and save their money. As a direct result, no one was eager buy property and those that were selling had no other option but to drop their prices.

However despite the worrying drop in the market for Barking and Dagenham, they were not the worst affected at this time. This was rather Kensington and Chelsea where house prices fell by over £11,000 over a couple of weeks in late 2008 and with the largest annual fall taking place in Merton and Sutton.

The bleak picture that was being painted at the time was not lost on experts, analysts, and economists, who were aware that 2008’s dip in the market wasn’t a momentary lapse and predicted further declines in 2009. These predictions proved true with the plunge hitting its lowest point that year.

It would take a few years before things would show signs of growth, first stabilising in 2010 and 2011. In late 2013 and early this year, house prices across Britain saw their most encouraging rise yet and have hit their highest levels since the end of 2007, the peak of the property market.

Now we’re currently seeing an encouraging rise in the property market, though it is one to be cautiously optimistic about, in order to avoid similar fates of 2008. As the market is growing, now may be the time to put some serious thought into the move you may have been plotting for the last while.

Why did the house prices drop in Barking in 2008?