House price falls – opinions from experts
June 29, 2008
Last year many industry professionals began to predict that house prices throughout the UK would fall, although most thought that the fall would be minimal and some thought that house price inflation for this year would remain stable. However, there is little doubt that house prices are indeed falling and are likely to continue to do so over the course of this year and into next.
The Council of Mortgage Lenders has recently announced that it expects house prices to fall by around 7% or more over the course of the year, and even the government has inadvertently admitted that house prices are set to fall between 5% and 10% this year. Gloomy reports from various sources have revealed that house prices have already fallen over recent months, with the average house price now markedly lower than it was this time last year, although still higher than the same time two, three, and even five years ago.
Whilst the housing and mortgage markets continue to face an uncertain future a number of industry officials have expressed their opinions when it comes to house prices in the UK.
The National Association of Estate Agents blamed the house price falls on reduced economic and consumer confidence coupled with the effects of the credit crunch, stating: “The issue here is consumer confidence. It is apparent from our own survey results that some people are adopting a wait and see attitude, watching the market, before making any decisions, which is affecting prices. There is no denying that the credit crunch and tighter economic factors have affected confidence in the market but it is still important to remember that the underlying factors that support the property market remain: low unemployment, historically low interest rates and a latent demand for houses.”
The Department of Communities and Local Government added: “When looking at trends in the market, it is important to remember that UK house prices are 39% higher than five years ago. The current issue affecting the market is fundamentally about the supply of credit - a very different situation to the early 1990s which was about high interest rates and unemployment.”
A Capital Economics official said: “The sheer size of the drop in house prices, without the economy having yet slowed significantly, suggests that this housing market correction will be deep and prolonged.”
Another economist commented: “With lenders redesigning their products and mortgage provision moving back to some semblance of normality, it seems reasonable to assume that the pace of price declines will moderate as we move into the second half of the year.”
The sale of properties in the UK has also been badly affected, with estate agents selling far fewer properties than the average. This has again been blamed on lack of affordable mortgages and tighter credit conditions, as well as on the wait and see attitude that many buyers have adopted in case house prices continue to fall.
Recent additions:
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- House price growth could grind to halt in 2008
- Have you been priced out of the housing market? When industry analysts and economists began to make predictions last year that the ten year housing boom was finally over, and house prices in the UK would come tumbling down over the months to come,
- House price falls slow in pace Over the past year house prices have been falling month on month in the UK, with average house prices said to have fallen by close to 15% recently compared to the same period last year.
- London property market will lead the way to recovery Recent reports have suggested that whilst London may see the largest house price falls than any other area in the UK next year property prices in this area will also be the first to recover
- Homeowner that bought properties within last four years could face capital loss According to a recent report homeowners that purchased their properties under four years ago are worst placed to face capital losses from the effects of the ongoing house price falls, as many will have paid
- Possible £40,000 fall in house prices by end of 2009 According to recent figures house prices could fall by as much as £40,000 by the end of 2009. The figures indicated that compared to the peak of last October the average house price could fall
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