How far will house prices fall?
Following the recent report from the Nationwide indicating that house prices had fallen by 2.5% and had wiped thousands of pounds off property values, many industry officials have expressed their opinions on what will happen with house prices now. Some industry groups, such as the Council of Mortgage Lenders, have revised previous prediction with regards to how far house prices are likely to fall this year, with the CML changing its prediction from a 1% gain over the year to a 7% fall.
Following the recent fall, the Department of Communities and Local Government said “When looking at trends in the market, it is important to remember that UK house prices are 39% higher than five years ago. The current issue affecting the market is fundamentally about the supply of credit – a very different situation to the early 1990s which was about high interest rates and unemployment.”
The National Association of Estate Agents said: “The issue here is consumer confidence. It is apparent from our own survey results that some people are adopting a wait and see attitude, watching the market, before making any decisions, which is affecting prices. There is no denying that the credit crunch and tighter economic factors have affected confidence in the market but it is still important to remember that the underlying factors that support the property market remain: low unemployment, historically low interest rates and a latent demand for houses.”
One official from Capital Economics stated: “The sheer size of the drop in house prices, without the economy having yet slowed significantly, suggests that this housing market correction will be deep and prolonged.”
Recent news:
- Drop in mortgage lending levels for Nationwide
- Five year fixed rate mortgage now more popular
- Borrowers could benefit from advice on mortgages
- Base rate stays the same for June
- Asda may enter mortgage market
- Government rescue plan may take time to take effect
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