UK House Prices in 2010: My Forecast

Well, house price analysts Hometrack have added their tuppence into the debate over what 2010 holds for UK house prices. They have said that they will fall 1% next year, which is more than they have fallen this year according to the firm.

Here is my tuppence:

During the last crash in the 1980's, UK house prices fell for 3 and a half years straight, between Q3 1989 and Q1 1993, during which time UK homes lost 20% of their value. Prices were then flat until the second quarter of 1996.

Now, this time, house prices fell by 20% a lot quicker, and I would say that house prices would stay flat in 2010, had prices not risen significantly since the start of this year. For me, that rise will be cancelled out again and then prices will stagnate.

Depending on who you listen to prices have risen by 6% (Nationwide) - 8.5% (Halifax) since the trough in April, and I believe they will fall by between 6%and 8% next year, before then stagnating until at least the third quarter of 2011. Read this article for why I think the market will turn properly in Q3 of 2011.

While a lot of analysts and analytical bodies (Hometrack -1%, Savills -7%, Jones Lang la Salle -7%) share my views that house prices will fall next year, many others are predicting price rises next year, most notable the Centre for Economics and Business Research (CEBR), as well as Chestertons and Hamptons.

Of course no one knows for sure what is going to happen to UK house prices in 2010, we are all just making educated guesses. It sure will be interesting to see who is right though.

Data on 1980's crash from Nationwide historical data

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