UK house prices face 5% fall
Permalink: UK house prices face 5% fall
by Gill Montia
In a report published today, a leading economic forecaster makes mention of a 5% overall fall in UK house prices in 2012.
The prediction is included in Ernst & Young ITEM Club’s outlook for the UK banking sector, which notes that the housing market has experienced a “renewed softening” over the past year, with prices having so far declined by around 1% from their 2010 peak, according to the Nationwide measure.
However, with demand fundamentals remaining weak, and the banks unlikely to ease lending criteria substantially in the near-term, the Club expects the value of the average home to continue falling next year, with a disturbing January to December decline of 5%.
To complete the picture, the analyst suggests lenders need to brace themselves for higher losses on residential mortgages that will have to be written off against lower property values, as repossessions in the next phase of the housing market crash mount.
The report states: “Losses on residential mortgages have so far remained very low due to the exceptionally low level of short-term interest rates.
“But there is likely to be renewed upward pressure on arrears and defaults on secured lending as the UK government’s fiscal tightening starts to bite.”
About the only good news contained in the report for homeowners is the prospect of a period of steady insurance premiums, as the UK’s general insurers fight for business amid falling volumes, both this year and next.
Click here to discuss this: Home Move property forums
Related stories to: UK house prices face 5% fall
Previous: « Factsheets to curb landlord / tenant disputes
Next: Landlords keener on family homes »
Visited 2593 times, 1 so far today