Is there any point forecasting house prices for next year?
Each year a number of major lenders in the UK, along with the Council of Mortgage Lenders, tend to prepare a forecast for house prices in the UK over the coming year. However, this year has been very different, largely due to the turbulent housing market, tumbling house prices, and the unpredictable climate. In fact, it has become increasingly difficult for even industry experts to predict what will happen with house prices over the coming year, and this is why some have decided not to bother.
For some years now two of the UK’s major lenders, the Halifax and the Nationwide, have been releasing house price forecasts, and these are amongst the longest standing and most widely followed forecasts in the industry. However, for various reasons these lenders have now decided that for the moment they will be postponing any predictions about house price movement over the coming year. The announcement from the lenders came at the end of a particularly difficult year for the housing market.
Officials from the Halifax stated recently stated that they have decided that it would not be appropriate to publish predictions regarding house price movement next year given that it is being taken over by Lloyds TSB.
An official from the Halifax stated: “HBOS will no longer exist next year so it’s been decided it’s not appropriate to make a forecast. We don’t know what Lloyds’ view is; they may not want to use our forecasts.”
The reason why the other lender, Nationwide, has decided to forego releasing any house price movements for next year is simply because the markets are too difficult at the moment.
The Nationwide stated: “Things are changing so rapidly in the market, which makes it very difficult to forecast. When things have settled down a bit we may be in a position to review this next year.”
However, it is not just these lenders that have decided that there is little point in trying to predict house price movement for the coming year. Even officials from the Council of Mortgage Lenders have decided that the CML will not release any house price predictions for the coming year for now because of the difficult markets.
The CML has said that it would be futile to make such predictions at present, and some officials have also expressed concern that to predict further falls in property prices could actually become a self fulfilling prophecy because it may drive down confidence amongst potential buyers.
There have been mixed general opinions amongst industry professionals with regards to what might happen with house prices, with some stating that there is a chance that they could stabilise but many stating that they are likely to fall over the course of the year and possibly into 2010.
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