Home » property » forecast for UK house prices 2011, Slight falls

Thursday, December 30, 2010

forecast for UK house prices 2011, Slight falls

forecast for UK house prices 2011 Slight falls ; The housing market is expected to suffer modest falls in both prices and the number of transactions next year as government austerity measures weigh on demand for homes and mortgage availability remains constrained.

The consensus of forecasts for house prices suggests that the average home will lose about 4 per cent of its value by 2012, although predictions from the more established bodies range between a fall of 10 per cent and a rise of a little more than 2 per cent.

The Royal Institution of Chartered Surveyors estimates that house prices will finish the year about 2 per cent lower than at the end of 2010 with mortgage finance remaining tight. However, falling supply could provide a platform for the market to stabilise at some stage in the first half of 2011, according to Rics.

Capital Economics predicts that house prices will fall about 10 per cent during the year, counting factors such as a subdued mortgage market and a rise in unemployment as reasons to continue to be bearish on outlook.

Many commentators had predicted more extreme declines during 2010, although the lasting effects of economic stimulus and low interest rates helped maintain house price growth past the summer before more recent signs of weakness. House prices will end this year only slightly lower than at the start.

However, Henry Pryor, a housing commentator, said there was little evidence to suggest the falls expected in 2010 would not show up eventually. “Sale volumes are wafer-thin, the gap between average asking prices and average sale prices is close to record highs and people who have to sell are considering much lower prices than their asking price suggests.”

One of the factors expected to constrain home acquisitions is the lack of mortgage finance, in particular for first-time buyers who need large deposits to secure their move on to the housing ladder.

The leading estate agencies are also broadly downbeat in their outlook for 2011. Knight Frank forecasts a 6 per cent fall in the main UK market, hampered by weak growth in real incomes, declining consumer confidence and the difficulty in accessing the mortgage market.

Savills calculates that prices will fall by about 3 per cent by the end of next year in the mainstream market, while Carter Jonas predicts prices will decline 5 per cent and Hamptons expects values to fall by 4 per cent for the UK market.

Catherine Penman, head of research at Carter Jonas, said: “The stalling economic situation reinforced by the comprehensive spending review, weak outlook for mortgage demand and the imminent public sector cutbacks collectively imply a further weakening of demand in residential property over the year to come.”

Almost all agents believe that there will be greater stability in London, however, in particular in prime areas, which are expected to continue to benefit from an influx of overseas wealthy buyers looking for safe haven investments. Both Hamptons and Carter Jonas predict that London homes will rise by 5 per cent in value during 2011.

Not all main market forecasts are negative for next year. The Centre for Economics and Business Research is unusual in predicting a positive outcome for 2011. CEBR expects house prices to rise 2.2 per cent next year based on its belief that there will be another round of quantitative easing before April, which would stimulate lending to the housing sector. Cluttons is also predicting a more benign year, with prices expected to end 2011 just 0.1 per cent below where they start the year. For the latest updates PRESS CTR + D or visit Stock Market news Today

Related Post:

Posted by at
Labels:

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)