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Thursday, 7 October 2010

House prices fall. So what does it mean for businesses?

Halifax have announced a sharp fall in house prices in September, down 3.6% for the month of September. So what does this mean for business?

House prices have been an important psychological factor on consumer behaviour. However, since the crunch I think there has been a disconnect between the value of people's homes and spending. Householders for some time have stopped remortaging and spending in the belief that prices will continue to rise so this fall is not too significant.

What needs to happen is that housing activity picks up; moving, building, extending. The lack of activity is the biggest threat to the economy. Many traders, removal companies and even large building companies are struggling in this market freeze. Many have contacted KSA Group for help.

In keeping with confusing statistics (see my earlier blog post) it has just been announced today that manufacturing output rose for a sixth consecutive month in August, growing faster than expected to lift the annual rate to its highest in over 15 years!

Funnily enough all the economists are saying they are cautious on the outlook..

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