House prices still far from stabilising
According to think tank Oxford Economics, UK house prices will fall 12.2% this year and a further 4.6% in 2010, before stabilising with a small increase in 2011. This forecast comes despite several recent surveys showing a small but steady increase in prices over the past three months, and confirms the more cautious view that this increase was more of a temporary bounce than a sustained recovery in the property market.
[UKPRwire, Fri Aug 07 2009] According to think tank Oxford Economics, UK house prices will fall 12.2% this year and a further 4.6% in 2010, before stabilising with a small increase in 2011. This forecast comes despite several recent surveys showing a small but steady increase in prices over the past three months, and confirms the more cautious view that this increase was more of a temporary bounce than a sustained recovery in the property market.
The organisation’s report was prepared for the National Housing Federation (NHF), and its conclusions are in marked contrast to Nationwide’s last house price index – which reported a 1.3% rise in prices in July and expressed the view that house prices could end the year higher than at the start – as well as this week’s figures from Halifax, which showed a 1.1% increase in July, the second rise in three months.
The think tank’s report predicts a steady climb in property prices after 2011, with an increase of around 20% by 2014. This research suggests that some homeowners may be stuck in negative equity for at least another five years until the market begins to recover in a sustained fashion.
Regarding the confidence levels and expectations of real estate agents, the Oxford Economic report also shows contrasting results. According to a confidence survey by online estate agency propertyfinder, estate agents expect prices to rise slightly during the third quarter of this year – compared with a predicted fall of 1.3% last quarter – and also expect transaction levels to continue to rise through the next quarter, by 6.4%.
Nicholas Leeming, a director at propertyfinder, said this survey shows that “the market is finally moving into recovery mode with prices picking up and transaction levels continuing on their upward spiral”.
Furthermore, estate agents see sellers as being in a stronger position, with nearly half of agents reporting that over the last three months the market has become more favourable for sellers. Properties are also spending less time on the market, currently around 5.1 weeks in comparison to a peak of 7.2 weeks in the first quarter.
With such contrasting, even contradictory, predictions of how the housing market will perform in the short-term to longer-term, the message seems to be that it is still in a state of flux and it is far too soon to become complacent about its recovery just yet.
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