House prices falls over the next 18 months

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by Kay Murchie

A study from Experian, the credit reference agency, predicts that property prices will fall in half of the country over the next 18 months. It implies the biggest fall of 4% will be noted in the West Midlands.

Experian say the property price declines will be fuelled by the knock-on effects of the worldwide credit squeeze. Confidence has been dented and many buyers are delaying and are in ‘wait and see’ mode. Furthermore, lenders are becoming much stricter on who they will lend to.

A 3.7% fall is predicted for the East Midlands, a 2.8% fall in the South-West, 2% in Northern Ireland, 0.7% in the East of England and a 0.4% fall in the South-East.

Andrew Burrell of Experian said the UK economy and property market will become direct casualties of the current worldwide credit crunch.

Mr Burrell added that Experian expects economic growth to slow from 3.1% this year to 2.1% in 2008. The downturn in consumer demand is more abrupt, with demand growing by less than 2% year-on-year, he said. Only considerable interest rate cuts will bring an improvement from 2009.

Experian believes the UK property market will suffer over the next 2 years. House prices are forecast to record the lowest annual increase since the mid-1990s, while repossessions are also set to reach 15 year highs.

However, Experian expects that the City of London will support the market, with prices expected to rise 6%. Scotland is also expected to see a significant increase, 7.7%, while the figure for Wales will be up by 3%.

Experian said in a statement that the position could be even worse than anticipated. Lenders may come under further pressure to tighten their lending criteria. This could easily flow into the property market and result in price falls in all regions.