CEBR: Further significant house price falls unlikely

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by Kay Murchie

The Centre for Economics and Business Research (CEBR) said today it expects house prices to lose a further 3% of their value during the remainder of 2009, before bottoming out and rising just 2% in 2010.

Benjamin Williamson, CEBR economist, said: “Our view is that the extent of house price falls already seen means further significant falls are unlikely.”

According to the organisation, house prices will have fallen by around 24% from their peak in autumn 2007, using the Halifax’s monthly house price survey as the benchmark.

Last week, the Halifax reported a 1.1% rise in house prices in July, while independent financial adviser firm Bestinvest said that house prices have bottomed out and confidence in the property market will grow over the next few months.

Also last week, the Royal Institution of Chartered Surveyors scrapped its original forecast of house price falls of 10-15% in 2009.

Instead, the organisation said it has noted a “considerable shift” in the market and believes that despite the mortgage drought and rising unemployment, house prices may end the year slightly up.

However, many reports still highlight that the lack of mortgage funding could still hinder a recovery in the property market.

Mr Williamson of the CEBR cautions: “The key question now is the extent to which rising unemployment and weak wage growth will lead to a second wave of house price falls, or whether this has already been built in to existing expectations.”