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Peter Hun

London House Prices Could Fall A Further 18%

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London house prices could fall a further 18%

* Story by: Dominic Welling

* Magazine: FTAdviser

* Published Tuesday , May 26, 2009

House prices will fall by further 14 per cent over the rest of the year with an additional fall of up to 3 per cent in 2010 despite the recent talk of green shoots of recovery.

Meanwhile, values in central London could decline even further, by up to 18 per cent by the end of the year, according to Jones Lang LaSalle's latest UK Residential Market Forecast.

James Thomas, head of Jones Lang LaSalle's residential investment team, said: "It is important to remember that the recent green shoots of recovery are still very green. The UK economy is still in dire straits and it is unlikely that the full impact of declining employment has yet to hit the housing market.

"It is also plausible that the current fillip is only temporary and due to the sharp fall in interest rates, improved affordability and activity from overseas investors taking advantage of the weakness of sterling."

Thomas added: "The key obstacle will be significantly higher unemployment and the implications this has for repossessions and household finances. The number of properties on the market is also likely to mount up during 2009 as people struggle to sell their homes.

"The effect of negative equity for many homeowners will be an additional burden for the market as it will restrict the number of people who are able to move home. All of these factors will put a strain on prices, activity and confidence."

According to the forecast, London will lead the housing market recovery with some positive house price growth in the autumn of 2010.

The capital is also expected to inevitably experience the strongest house price recovery during 2011-12, partly due to the Olympic Games.

By 2010, Jones Lang LaSalle has predicted that average house prices will be 28 per cent below their 2007 peak.

This will encourage new demand, and first-time buyer demand in particular, with both expected to be supported by a more stable and generous mortgage market compared with today.

Overall, the firm has calculated UK residential price growth to be 4-6 per cent during 2011, increasing to around 9 per cent during 2012-13.

Thomas added: "Despite the current housing market woes and the uncertainty of the near future there are still strong medium and longer term prospects for the UK housing market.

"The housing market is likely to remain fragile as the wider economic recovery takes place but good buying opportunities will exist during this period."


Edited by Peter Hun

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Started well, got into EA-speak half way through and ended, typically, in full ramping mode.

C minus. ;)

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