Expert Predictions for 2009
What do house prices have in store for us in the coming year? We have looked at a few residential research papers to discover what the experts are saying about falling house prices, and whether there is consensus over when the UK housing market will be facing a more positive outlook.
Chief executive of the Nationwide Building Society, Graham Beale, predicts the UK house prices could fall by as much as 25 % from the peak in August of 2007. ‘I think we are into 2010 [before recovery]. Next year we will see a similar pattern to this year - we will see further falls in house prices. And I think before we really get to the new world, whatever that is, I think we will be into 2010.’
Yolande Barnes of Savills supports Beale’s assertion that prices will fall by 15 % in 2009. But she says that from 2010 the housing market will recover and will increase 20 % by 2012, with London leading the way. Barnes said: ‘Whilst we expect to see further falls in 2008, leaving values down 15 % year on year by the end of the year, and we acknowledge the prospect of further falls in 2009, we do expect the prime central London market to be one of the first to recover, and to recover rapidly, potentially returning to growth in 2010.’
Knight Frank head of Residential Research, Liam Bailey, has taken a more conservative stance on the house price market. Although their research suggests agreement with Barnes’ statement to expect a further 15% fall in prices the latter of 2009, Bailey makes no such predictions of positive growth until 2015: “Prices will take some time to recover to their 2007 peak, a process which, on average, will be complete by 2015, led by central London properties (2012) and concluded by Northern Ireland (2019).”
Finally, the NAEA told the BBC: ‘I believe house prices will bounce back much more quickly than has been forecast and I don’t see prices going down by 25 %’ is what Chief Executive of the National Association of Estate Agents, Peter Bolton King, has told the BBC; ‘The Centre for Economics and Business Research predicts the housing meltdown, as it calls it, will stop in the middle of next year, which I believe as well. They also say that by 2012 the average house prices would increase by more than £50,000 to a record £226,000 on average.’
He refers to the statement from Benjamin Williamson, an economist at the CEBR: “The glimmer of light at the end of the tunnel for the beleaguered housing market is that prices and interest rates are now at levels whereby any improvement in lending is likely to lead to substantially increased activity and at the very least a bottoming out in house prices.’
However, Bolton King failed to account for the latter of the CEBR argument, whereby house prices will continue to drop unless lending improves, coinciding with a rise in unemployment and the biggest drop in UK GDP since WWII demobilisation.
In conclusion, there appears to be little indication of an end to falling house prices before summer 2009, with little consensus as to whether an increase is likely in 2010. The UK, more than any other nation, is suffering through the recession and it may not be as much of a ‘quick fix’ situation as we’d hoped. If you’ve experienced any of this first hand, or if you disagree with any of the statements provided, feel free to post a comment.
