Welcome...kkk. to Buyabetterhome fgdfhgdfgdfgdfgdfgdf With around 10-16% wiped off the value of the average home, there is little doubt that 2008 was a terrible year for the housing market – but will 2009 be any better? At New Year it is a traditional time for the movers and shakers in the money markets to make a prediction about what will happen to house prices. This year, rather predictably, most forecasts are very negative and there are some notable exceptions in terms of who hasn’t predicted anything at all.
The Royal Institute of Chartered Surveyors (RICS), the purveyors of some very gloomy forecasts recently, say that house prices will fall by 10% in 2009. That sounds feasible given what happened in 2008 but then again they said that house prices would remain static during the year just gone – so that was way off the mark. The reasons for this predicted fall – caution among mortgage lenders and a worsening economic climate. The RICS data comes from estate agents and is considered to be an important barometer for market conditions. This data has highlighted the serious slump in property sales, showing in many cases the worst figures since their records began thirty years ago.
Hometrack, the housing information service concurs with RICS by also predicting a 10% fall in property prices over the coming year. Their prediction is based on the Department for Communities index, down 7.4% to October. Hometrack also say that prices fell by 9% in 2008 and will fall a further 3% in 2010, making a total fall, from peak to trough, of 22%. These predictions would put affordability on par with the early 1990’s but this factor is heavily dependent on the availability of mortgage finance.
The Treasury prediction for 2009 comes in a little more precisely at 9.2%, although the Treasury stresses that this is not a prediction but rather a summary of forecasts from a pool of City and independent experts. Because the Treasury use a number of different sources, which are regularly updated, this could make its predictions more accurate and if this figure is to be believed it means that 2009 will be kinder to the property market than 2008 was. With a fall of 12.7% in 2008 the Treasury’s culminated figure for house prices over this year and next year comes in at 21.9%. Using Land Registry figures this means that the average house that was worth £184,950 in January 2008 will be worth £144,446 at the end of 2009.
Conspicuous by their absence in the 2009 predictions are Halifax and Nationwide. Halifax said there would be no change in house prices in 2008 – a very optimistic view as it turned out, one that was based on sound economic fundamentals supporting house prices. Halifax stated that it would be inappropriate for it to make a prediction about house prices this year in light of its state-sponsored merger with Lloyds TSB. Nationwide also predicted a flat year in 2008 saying that the market would “pause for breath”. Over the course of 2008 the building society was to reserve their best rates for borrowers with a 40% deposit and charge a premium for other borrowers.
