House Prices What The Analysts Are Saying

Date Published:

25/06/2008

Want to know how the credit crunch is affecting the housing market and what experts think will happen to house prices? We asked the country’s top analysts for their views.

4Homes Essentials
Property Search
UK Region Ratings

House Prices, Going Up Or Down?

David Miles, Managing Director of Morgan Stanley, who predicts that house prices. will fall by 20 per cent in real terms in the next two years, comments, ‘Any housing market correction will not impinge on the wider economy. GDP growth is expected to increase by 1 to 2 per cent in the next year and although unemployment levels may rise, it would not be by much. I am not anticipating a recession in the UK.’

Fionnuala Earley, Nationwide's Chief Economist, says, ‘House prices fell for the fifth consecutive month in March. The price of a typical house fell by 0.6 per cent during the month, bringing the annual rate of house price growth down to 1.1 per cent – its lowest rate since March 1996.’

Commenting on the growing affordability constraints, Miles Shipside, commercial director of Rightmove.co.uk, says, ‘There is a large gap between sellers’ expectation and buyers’ ability to pay. The market needs to openly accept a 10 per cent reduction in house prices. to achieve an orderly correction to affordability.’

RICS spokesman, Ian Perry, said: ‘Confidence in the market is clearly having an effect on prices. A combination of a lack of available finance and weakening demand is causing a slow drop in capital values. While there is very little new supply coming onto the market, it is unlikely that there will be significant price drops in the short term but the build up of unsold stocks will encourage buyers to negotiate lower asking prices.’

Martin Ellis, chief economist of >Halifax, says, ‘House prices fell by 2.5 per cent in March. Prices in 2008 Quarter 1 were 1.0 per cent lower than in 2007 Quarter 4. Overall, we expect there to be a modest fall in UK house prices this year. Any declines, however, should be viewed in the context of the significant price rises over recent years. The average UK price has risen by £120,860 during the past decade from £70,696 to £191,556; an increase of 171 per cent.’

Following the release of the RICS housing market survey, Peter Bolton King, Chief Executive of the National Association of Estate Agents (NAEA) called for steadiness amongst property market professionals and said that there are still strong economic factors underpinning the market that have not changed and that there is some good news.

‘The positive news is that the RICS survey showed that just under a quarter of its respondents appear to have reported a rise in house prices., which shows how regionalised the picture is. We are already aware from our own members that house prices are being affected differently throughout the country so to find such regional discrepancies comes as no surprise.

‘No one is denying that the housing market is in a tricky situation, but it is important to keep it in perspective and we do need to exercise discretion in the figures. For instance, the report states that the East Midlands is showing falling prices, yet the recently released Halifax house price index showed a 2.2 per cent rise in the same region. This also needs to be set against the fact that these areas have seen huge price rises over the last ten years.’

First Time Buyers

Shelter chief executive, Adam Sampson, says, ‘Every year the gulf between what first time buyers can afford and the cost of housing is widening. Despite falling house prices., many lenders are increasing their mortgage rates, making an already desperate situation worse. It means there is a generation of young people and young families being locked out of the housing market without a hope of ever sharing in the asset wealth of the generation before.’

For the full story about what’s happening with the housing market, go to our analysis of house prices.

The views represented in this article are those of the author and not of Channel 4. The purpose of the article is to provide general information only and does not constitute financial, investment, legal or other advice.You should not rely on any information provided in this article and you should always seek out independent professional advice relevant to your own particular circumstances.

Back to top