UK House Prices: There is Only One Realistic Forecast


Share

Well, the latest news on the UK housing market is that Savills are forecasting house prices will fall sharply next year, before resuming solid growth in 2011, which will accelerate in subsequent years. And research body Hometrack have revealed a 0.2% growth in house prices in October, but also found that demand is beginning to decrease, which could dampen the upward pressure on prices.

For once I actually agree with Savills. Mostly because they are forecasting what I forecast a couple of months ago (glad it is on an external site), that a second dip will come in UK house prices, and that it will only be turned around by the economy reaching the point in a recovery when employment turns into positive growth, which I also said would be 2011 -- mid-2011 to be precise.

As for Hometrack: I trust their data because it is well presented and apparently impartial. So, if Hometrack says demand is beginning to drop off then there may be trouble ahead. The recent rise in houses has always been supported by a marginal increase in demand meeting a massive shortage in supply. Therefore if demand decreases -- even marginally -- it will lead to a second dip in UK house prices.

Anyone who takes a logical and impartial look at the UK housing market will come to a similar conclusion; the conclusion that a second dip is inevitable. There are just too many things that are likely to trigger it:

  • Unemployment:
    Because it will either lead to a rise in supply from repossessions, or a fall in demand because of the obvious, or both.
  • Restricted mortgage lending:
    Because it will lead to a fall in demand when cash buyers dry up, including foreigners who will disappear if the pound strengthens -- though that is only likely to happen when the economy is really recovering and unemployment beginning to fall.
  • Affordability:
    When the downturn began the average mortgage repayment was taking 136.2% of a first time buyers salary. The last correction brought it down from 147.7% to 60% before prices rose for any more than a month or two, and down to 46.2% before the market truly began to recover. The current correction had taken it down to 91.6% before prices started rising and pushing it back up again.

I could go on, but you can come up with the rest yourself. If anyone can present as many reasons to support the current price rise becoming a full recovery please feel free to do so with a comment below.

Like this post? Subscribe to our feed by RSS or Email, join our newsletter(s) or leave a comment using the form below.

By Liam Bailey - 2009-11-06 22:03:02

Buy articles button Page copy protected against web site content infringement by Copyscape

Bookmark and Share Bookmark and Share Add to Mixx!

Leave a Comment on this Post

Filed under: UK Property, Opinion Articles

Tagged: UK House Prices | UK Housing Market | Forecasts |

About the Author: Liam Bailey

Liam is the director of Write About Property.

View all UK Property ArticlesSubscribe to UK property articles feedUK property articles by Email

View all ArticlesSubscribe to Write About Property articles feedAll Write About Property Articles by Email

 
Have Your Say - Post a Comment

captch image

Your Ad Here

Subscribe by Email

Enter your email address:

Delivered by FeedBurner

By Rss
feed icon

Sponsors



Socialise with Us

Facebook fan page

Links

Latest Posts

Mortgages Fall by Half in Jan, Another Nail in UK House Prices' Coffin?

Gocek Property Highligted for Investment Potential

UK House Prices: Second Correction Looking More Likely

SEO Tips: When is a Link not a Link?

Villas in Icmeler Named as Among Most Popular Turkish Properties

UK House Prices Up or Down Depends on the Index

UK House Builders Risk Reputation to Sue Defaulters, What???

Why People are Buying Spanish Property Again

UK House Prices: What Will Spring Bring?

Turkish Tourism in 7.7% Year-on-Year Increase in January

Related Posts

Mortgages Fall by Half in Jan, Another Nail in UK House Prices' Coffin?

UK House Prices: Second Correction Looking More Likely

UK House Prices Up or Down Depends on the Index

UK House Builders Risk Reputation to Sue Defaulters, What???

UK House Prices: What Will Spring Bring?

UK House Prices: Support Growing for Second Crash Scenario

UK House Prices may be Flat in 2010 but the Market will certainly be Rocky

New Legislation to Affect Landlords in the UK, but How Much...

A Long Hard Look at the Medium-Soft UK Housing Market

UK House Prices Still Rising Says Govt. But How Long Can it Continue?

Sponsored Links