House prices set to continue falling
January 19, 2009
Recent reports have suggested that house prices in the UK are going to continue falling with one industry group predicting that there will be a further 10 percent fall in house prices over the coming year.
Compared to the house price peak in the summer of 2007 this will result in a massive 25 percent fall if the prediction comes true. This would reflect the biggest ever house price fall. The prediction of a further 10 percent fall has been made by officials from the Royal Institute of Chartered Surveyors.
However, officials from RICS have also predicted that there could be a rise of 10 percent in property sales, but that in order for this to happen the government has to take action to ensure that mortgage funding starts to flow once again and that would be buyers are able to get the finance that they need to fund their property purchases.
Earlier this year property sales levels plummeted to an average of less than one property per week per agent.
The RICS chief economist recently stated: “The numbers are going to get worse before they get better. Lenders are likely to remain cautious in the near term in the absence of any guarantees on mortgage backed securities. This, coupled with an increasingly gloomy economic picture, suggests that house prices will continue to decline in 2009.”
RICS has also predicted that there will be a slump in house building over the coming year, and the chief economist added: “It is likely that there will be even fewer new starts in 2009 leading to a very real risk that a serious housing shortage will fuel another bout of volatility once the current crisis eases,” .
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