Property prices expected to continue to fall

Permalink: Property prices expected to continue to fall
by Kay Murchie

At its third annual Great Housing Market Debate, Wriglesworth Consultancy asked 150 industry representatives their views on the future of the property market. The poll established that just one said average prices would increase this year.

The majority of the representatives said they believe that property prices will decline in the next 12 months but a recession is extremely unlikely.

Earlier this year, Neil Woodford of investment house Invesco Perpetual, said property prices across the UK will fall 8% to 10% this year.

David Miles, chief economist of Morgan Stanley, predicts that property prices will fall by 20% in real terms in the next 2 years. He added, although unemployment levels may rise, it would not be by much. I am not anticipating a recession in the UK.

Many experts are concerned about the declining volume of sales in the housing market. Regardless of price, if the number of properties being sold falls the property market will experience a sharp decline.

Richard Donnell of Hometrack said if transactions levels keep going down and at the current level, homeowners on average would be moving every 20 years.

Mr Miles commented house price falls will have as many gainers as losers. The quick way that first-time buyers can be helped onto the market is if house prices fall.

The one dissenting voice at the Great Housing Market Debate was from Stewart Law, Assetz chief executive, who said the mere fact everyone said that house prices will fall this year reaffirms my belief that house prices will now in fact modestly increase.

This lack of confidence within the industry is a clear indication that we have hit rock bottom and things are set to improve. The dire shortage of housing stock in the UK will spike up rents and keep prices afloat, concluded Mr Law.