The Inside Edge
If you are wondering how much your house will be worth in the coming year then you are not alone.
The latest Halifax House Price Index published last week reported that house prices rose for the 5th successive month, rising 1.4% in November to bring the average house price to £167,664. Housing economist Martin Ellis said that rising prices this year have been due to
…increased demand for property, largely due to the improvement in affordability for existing homeowners and first-time buyers who can raise the necessary deposit…combined with a low level of properties available for sale (which has) push up prices.
But where do we go from here? Most house price surveys have reported rises (albeit timid) that have exceeded most industry expectations this year. We review some predictions for the coming year from the leading sources.
Predictions for 2010
‘Further ahead, the prospects for the market will depend on how the UK economy evolves and whether there is a significant increase in the supply of properties for sale. Overall, our view is that house prices will be flat during 2010.’
- New Year burst followed by post-election uncertainty, leaving prices on average static at 0% by year end
- Shortage of new sellers and price rises in better locations to continue, though more forced
sellers and price falls in recession hit areas post-election
- Recession-induced structural changes encourage landlords to expand their portfolio
- 2010 transactions to exceed 2009, but still predicted a third down on historic norms
The recent pick up in house prices is based on fragile economic fundamentals such as a weak pound, which has driven overseas buyer demand, and a boost from the stock market recovery, both of which are unlikely to be as supportive during 2010. It is very probable the present recovery will stall next year with prices falling by 7% as the rate in the increase of new buyers to the market eases, while the low number of properties on the market bottoms out and starts to rise again.”
Royal Institute of Chartered Surveyors (RICs) Housing Market Survey Oct 09
- Prices continue to rise with surveyors increasingly optimistic
- New buyer enquiries continue to grow strongly.
- Sales expectations and price expectations also improve, although the former does so at a slower pace than in August.
Rising consumer expectations…could signal a period of moderation in house price inflation ahead, which is fully consistent with October’s less pronounced increase in prices.
Nationwide Chief executive Graham Beale says: “The growth in house prices over recent months appears to be driven by lack of supply, and growth in unemployment throughout 2010 will inevitably exert downward pressure on house prices.”
What do you think?