Jump to content
House Price Crash Forum

Daily Mail - Top Bear Food

Recommended Posts

HOUSE prices need to tumble by 20 per cent to make homes affordable, economists said yesterday.

The claim came as the Nationwide reported a further slowdown in the property market.

Property economist Capital Economics said only a fall of a fifth in the average price – bringing the figure down by around £33,000 to £130,000 – will bring homes within reach of buyers.

It is predicting a fall of 10 per cent in 2011, which would wipe more than £16,000 off the current average price of £164,381.

Figures published by the Nationwide yesterday show house prices fell by 0.7 per cent in October - a drop of nearly £2,400. They are now down by six per cent this year.

Meanwhile, a report published by the Home Builders Federation (HBF) yesterday identified a first-time buyer crisis.

It said the typical young buyer needs a deposit of £37,233 to buy an average starter home costing £155,139. Without help from a parent, they would need to save 45 per cent of pay for five years to raise this sort of money.

The situation is even worse in high- price areas, such as London, where the average deposit for a first home has topped £62,000. The HBF blames a chronic shortage of new properties.

The chief property economist at Capital Economics, Ed Stansfield, said: ‘We believe that to put the market on a more sustainable footing, prices need to drop by around 20 per cent.’

Mr Stansfield said evidence that lenders are refusing decent- value home loans to anyone who does not have a large deposit, coupled with figures showing a drop in mortgage approvals, point to further price falls.

Meanwhile, buyers are taking advantage of falling prices with the return of gazundering. Up to 25 per cent are attempting to renegotiate the sale price downwards at the last minute, say estate agents.

The Nationwide figures show that prices have either fallen or remained static in every month since the end of May, with the drops seen during 2010 nearly wiping out the gains made during the early part of the year.

Prices have come under increasing pressures in recent months as potential buyers have adopted a 'wait and see' approach until the impact of looming Government cuts on the housing market and the wider economy becomes clearer.

But sellers have continued to return to the market, creating a mismatch between supply and demand and giving buyers the upper hand in price negotiations.

The quarter-on-quarter change to house prices, which is generally seen as a smoother indicator of market trends, also showed that the rate at which property values are falling has accelerated.

House prices dipped by 1.5 per cent during the three months to the end of October, compared with a 1per cent slide during the quarter to the end of September.

Nationwide said this was the biggest fall since April 2009, although it remains well down on the quarterly drops of 5 per cent and 6 per cent recorded during the second half of 2008.

The annual rate of house price growth also declined for the sixth consecutive month, falling to just 1.4 per cent - less than half the 3.4 per cent recorded during the previous month.

The news comes just days after Chancellor George Osborne had claimed a 'recovery' was underway following encouraging economic growth figures.

Gross domestic product was expected to be up just 0.4 per cent but the figures released on Monday showed the economy had performed much better - up 0.8 per cent.

Martin Gahbauer, Nationwide's chief economist, said: 'If the recent trend in house prices were to continue through November and December, the annual rate of house price inflation would drop to between 0 per cent and minus 1per cent by the end of 2010. This would compare to a rate of 5.9 per cent at the end of 2009.'

The fall in prices is good news for some though coming as new research outlines the difficulties facing first-time buyers.

A report by the Home Builders Federation states a typical first-time buyer would have to save every penny they earned for more than two years in order to get on to the housing ladder.

It would take someone in their 20s 27 months to save the average deposit of 24 per cent of a property's value currently being put down by first-time buyers if they had no other outgoings.

Even if young people put off buying a home for five years, they would still need to save 45 per cent of their take-home pay in order to raise a big enough deposit.

The group said a typical first-time buyer needed to save more than £37,000 to buy an average priced starter home but they earn an average of less than half this amount at just £16,400 a year.

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 419 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.