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House Prices 'set To Drop By 2% In 2011'

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House Prices 'Set To Drop By 2% In 2011'

Last Updated 04:04 22/12/2010

Huw Borland, Sky News Online

House prices look set to drop by 2% in 2011 - but a shortage of homes on the market should prevent bigger price slides, according to surveyors.

Property values are likely to continue falling during the coming months, the Royal Institution of Chartered Surveyors (Rics) said.

But a lack of supply should help to stabilise the market at some point during the first half of next year, the group said.

Prices could then begin edging up again during the latter part of the year, to leave property values close to where they started the year by the end of 2011.

The group said a key risk to its forecast was that public spending cuts would increase unemployment more than it expected - and this could put off potential buyers.

But it said, even if this happened, a shortage of properties coming on to the market was likely to prevent prices falling by more than 5%.

The group expects the number of homes changing hands to remain broadly flat during the year at around 900,000, as the lack of mortgage finance keeps transaction levels down.

This would be well down on the peak of nearly 1.7 million sales in 2007.

Rics chief economist Simon Rubinsohn said: "Transactions levels will remain flat as mortgage lending remains subdued for another year with many first-time buyers struggling to meet their aspirations of home ownership."

But, on a brighter note, the group expects repossessions to fall back slightly.

It estimates around 33,000 people will lose their homes during 2011, down from around 36,000 this year, as a combination of low interest rates, Government support schemes and lender forbearance helps people to stay in their properties.

The Rics forecast is considerably more optimistic than some predictions.

Capital Economics expects house prices to end next year around 10% lower than they started it, followed by a further 10% fall in 2012.

2%? maybe 2% in January! I think it will be closer to Capital Economics' prediction.

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I'd say we'll probably see 2% in a few of the months, but RICS think that there will be a strong V shaped recovery towards the end of the year.

OK, then, lets see how that works out. What's the trigger going to be, further reduction in interest rates, increasing employment, LIAR LOANS, restricting supply by burning some houses down?

House prices 'to drop 2% in 2011'

(UKPA) – 6 hours ago

House prices look set to end next year 2% lower than they start it, but a shortage of homes on the market should prevent bigger price slides.

Property values are likely to continue falling during the coming months but a lack of supply should help to stabilise the market at some point during the first half of next year, the Royal Institution of Chartered Surveyors (Rics) said.

Prices could then begin edging up again during the latter part of the year, to leave property values close to where they started the year by the end of 2011.

The group said a key risk to its forecast was that public spending cuts would increase unemployment more than it expected, and this could depress interest from potential buyers.

But it said even if this happened, a shortage of properties coming on to the market was likely to prevent prices falling by more than 5%.

Simon Rubinsohn, Rics chief economist, said: "The lack of supply in the market is likely to prevent significant house price declines in 2011.

"The narrowing gap between supply and demand will see the gentle downward trend in prices currently taking place at least partly reversed as the year wears on."

The group expects the number of homes changing hands to remain broadly flat during the year at around 900,000, well down on the peak of nearly 1.7 million sales in 2007, as the ongoing lack of mortgage finance keeps transaction levels down.

Mr Rubinsohn said: "Transactions levels will remain flat as mortgage lending remains subdued for another year with many first-time buyers struggling to meet their aspirations of home ownership."

But on a brighter note, the group expects repossessions to fall back slightly. Around 33,000 people will lose their homes during 2011, down from around 36,000 this year, as a combination of low interest rates, Government support schemes and lender forbearance helps people to stay in their properties.

ed:link

Edited by Captain Cavey

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Even 2% would be fairly decent. Considering inflation is running at 3% a year.. that would be a 5% drop in real terms. Ok if that happens not the crash HPCers are hoping for, but still a controlled fall.

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Even 2% would be fairly decent. Considering inflation is running at 3% a year.. that would be a 5% drop in real terms. Ok if that happens not the crash HPCers are hoping for, but still a controlled fall.

People are being paid 3% more a year?

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People are being paid 3% more a year?

I'm being paid 0% more a year. So I need nominal falls. But all the time prices aren't nominally rising my deposit increasing and taking a big chunk off my future mortgage every month.

Edited by Pent Up

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The article is VI twaddle.

It is a bullish article disguised as a bearish one to make it seem more believable. Of course prices will fall at the start of the year, and they are already trying to put people in a mind set of "They'll go up in the second half of the year," to

  1. Minimise asking price reductions in the first half of the year
  2. Encourage people to snap up slightly reduced houses, expecting a rise
  3. If they're very lucky and have crossed all their proverbial bits, may even manufacture a small rise late summer

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How the hell does anybody know?

2% or 20% predictions... The market is not moving in line with fundamentals at all so it's guess work.

Getting really tired of these VI predictions.

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Plus, how can asking prices slide 6.2% in only two months but real sale prices for the next 12 months will only fall by 2%. As someone else has said, a VI article dressed up as small bear.

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People are being paid 3% more a year?

Allegedly if the econmy grows 1.5% per capita in real terms and inflation is 3%.. your average person should be seeing a 4.5% pay increase next year.

Of course I don't see how our economy could be growing in real terms if production in nearly everything from new houses to cars is falling.

Compare and contrast British electric consumption since 1980, with an economy, South Korea which is clearly powering forward.

UK electric consumption in billion kilowatt hours:

1980: 243

1990: 285

2000: 335

2008: 344

South Korea electric consumption in billion kilowatt hours:

1980: 32

1990: 94

2000: 236

2008: 402

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B0llocks, of course, but at least they do say that HP will drop, and that's the only message that counts.

sometimes you only need a small snowball to create a mammoth avalanche. (I was going to use the bull stampede analogy but looking out the window the snow one appears more fitting)

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Just caught some RICs stroker on radio 5. Apparently, 'a lack of quality stock will provide a buffer to the market.' He then expressed sorrow for the poor ftb's who still won't be able to reach the bottom rung....

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Not this nonsense again.

The VI's assume that the restriction in supply seen in 2009 can be constantly repeated each time prices start to slide. For this to actually work, everything else involved in the house price equation needs to stay the same.

This will not be the case due to unemployment, consumer confidence, taxes rises and inflation in basics.

This is claptrap.

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fewer houses on the market due to mortgage holders clinging on by their fingertips or 'renting it out' will not make an increase in 'prices paid' happen. it is a nonsense as the 'value' is determined by the amount a buyer will pay - not the amount of the mortgage, not the 2007 value etc. :blink:

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The VI's assume that the restriction in supply seen in 2009 can be constantly repeated each time prices start to slide. For this to actually work, everything else involved in the house price equation needs to stay the same.

There are several flaws in this thinking - I believe that the number of those registering an interest to buy is falling faster than those who decide not to sell.

Furthermore, there was a really great point made a couple of weeks on this site by someone I can't remember (sorry) about the amount of pent-up supply there is out there - accidental landlords, people who have delayed and delayed selling so they can get a peak price that wont be back for years or even decades. How long will they keep holding out?

Also worth considering is the number of people who have taken their property off the market to try again in the Spring when "things will be better" :rolleyes:

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Doomberg ticker showing RICS saying that prices not likely to fall due to the chronic housing shortage.

1000 for sale in my search area says no.

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fewer houses on the market due to mortgage holders clinging on by their fingertips or 'renting it out' will not make an increase in 'prices paid' happen. it is a nonsense as the 'value' is determined by the amount a buyer will pay - not the amount of the mortgage, not the 2007 value etc. :blink:

I still feel that it needs a change in attitude with what buyers will pay though before we have a real correction. Currently prices are going down a bit because buyers simply can't get the silly money together that they could a few years ago, but I still feel there are far too many who would if they could. Only once far, far more people start saying "I'm not buying that at that price!" even if they could will a real correction take place.

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I tend to get an "inflationary adjustment" each year (normally about 2%) before any promotion amount. Is that not a standard feature?

entitlement post alert

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People are being paid 3% more a year?

I'm getting 3% and consider myself very very lucky. I see they are spouting the old supply being withdrawn as a floor being put under price falls. I think the opposite. A good couple of months falls at the start of the new year and those wwho kept their place off the market this year awaiting next springs 'bounce' will finally be panicked into trying to get what they can. Here's to hoping anyway!

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Only once far, far more people start saying "I'm not buying that at that price!" even if they could will a real correction take place.

Count me in that number. More people welcome to join me!

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  • 311 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
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