(1888PressRelease)
December 20, 2008 - According to predictions by Rightmove, the UK’s biggest residential property website, house prices are set to fall a further 10% next year, as the recession continues to ravage the UK and unemployment rises. In December prices fell by an average of 2.3% (to £217,808), and by more than 10% from the peak in May.
Barclays forecast a decline in home values by as much as 15% next year.
The decline in home loans has exacerbated the depressed market, and even with the cuts in interest rates (down to 2% on December 4th), mortgage financing remains very limited and confidence low. Notwithstanding the government’s rescue package for financial institutions, including £50 billion to strengthen their capital, banks are still reluctant to offer loans.
In October only 32,000 mortgages were approved by banks, the lowest figure since 1999. Meanwhile, estate agents and surveyors sold an average of 10.6 homes in the quarter through November, the least in the past thirty years, according to the Royal Institution of Chartered Surveyors (RICS).
Another factor that will impact negatively on the housing market is the rise in unemployment. Some 275,000 jobs will be cut by UK business services companies over the next two years, and around 18% of property workers will lose their jobs, according to a report by the Centre for Economics and Business Research.
A central bank credit survey of over 2,000 households carried out in Sept-Oct of this year showed that nearly one in six households said they had postponed house purchases due to the concern of not being able to access credit when needed. The survey also said that only 4% of homeowners with a mortgage have fallen into negative equity (a lower percentage than in 1995), and only 3% have fallen behind on payments.
With the British economy forecast to shrink next year, unemployment rising, and loan financing still hard to come by, the housing market looks set to continue declining until it bottoms out, probably in 2009, with the outlook perhaps beginning to improve in the following year.
“For buyers and sellers alike, the year is ending on a low note for the housing market”, said Lawrence Smith of Decision Homebuyers. “Sellers are recognizing that they have to lower their asking price if they have any hope of selling in the current conditions, while the continuing squeeze on credit means first-time buyers are still having to postpone any purchase.”
For press enquiries, please contact Phil Rendall on 020 7099 9026
Email: phil ( @ ) dhbuyers dot co dot uk
Web: www.decisionhomebuyers.co.uk
News provided by Decision Homebuyers, a leading UK property company offering a quick and simple solution for selling your home, no matter what the condition.
Decision Homebuyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.
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