Unlike the positive housing sector scenario in U.S., U.K. is facing a bleak scenario with a declining demand.
As per government figures of U.K., it was revealed that at the end of September 2012, work on 98,020 homes had been initiated. The figure has experienced a 9 percent decline from that of 2011, reported Wall Street Journal.
This is in stark contrast to the recovering housing sector scenario in U.S. which has hit a six year high. The reason behind the slump in U.K. home building industry is attributed to the weak economic conditions prevailing in the country.
However, the economic condition of U.K. is seeing a miniscule surge. Around 40,000 jobs were created in the quarter ending Oct. 2012. The unemployment rates in the country fell from 8 percent to 7.8 percent then.
Prices of houses are, however, racing in two different directions in both the countries. Housing prices are forecast to fall between 10 to 5 percent in U.K. Meanwhile, with the rising demand and tightening supply in the housing market of U.S., the prices have slowly begun to shoot up, reported WSJ.
"In view of the tightening supply and other improving conditions, many potential buyers who were on the fence are now motivated to move forward with a purchase in order to take advantage of today's favorable prices and interest rates," Barry Rutenberg, chairman of U.S. National Association of Home Builders told WSJ.
However, the case is not the same in U.K. As per the figures of Office for National Statistics, it was observed that more people in their twenties and early thirties still lived with their parents in U.K., which is the reason for lower rates of house-buying. Moreover, fears of low wages and job security is also deterring first time home buyers from taking the property plunge in the country, reported WSJ.
This is also obstructing people from saving for a mortgage deposit.
"House builders have done what they can, but there's a limit to what private businesses can do to shape the market," Steve Turner, spokesperson for the Home Builders Federation told WSJ. "Ultimately, we need to see the banks lending more so people who can afford to service a mortgage can buy."
Fitch Ratings Ltd had recently conducted a survey on U.K. home builders.
"In the U.S., the private sector has deleveraged by mortgage default," said Anil Jhangiani, head of executives at Fitch Ratings Ltd., told WSJ. "The U.K. should follow the U.S. housing recovery given time, but both remain fragile and face significant headwinds."
