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House Prices Set To Plummet By Up To 10% In 2011, Experts Predict

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http://www.dailymail.co.uk/news/article-1342385/House-prices-set-plummet-10-2011-experts-predict.html

House prices are set to fall by up to ten per cent next year as Government spending cuts bite and the problems in the mortgage market continue, economists said today.

In a survey 50 out of 56 economists who expressed a firm view said house prices will fall again. Just six predicted they would rise.

They are expecting declines of between five per cent and ten per cent as households struggle with tight finances, rather than a house price crash.

The predictions came as it emerged that first-time buyers now need an average deposit of almost £29,000 before they can get on the property ladder.

A worker on an average salary of £25,000 would take 15 years to amass the sum if they set aside ten per cent of their salary each month.

In London, where a deposit of £56,000 is now needed, the property market is unlikely to dip as sharply and is expected to continue to perform better than the rest of the country.

Three-bedroom semi-detached homes just outside the capital are expected to be the worst hit in the area as a result of public sector cuts.

House prices fell by 20 per cent between 2007 and their trough in 2009, but they went on to claw back around half of those losses as a shortage of homes on the market helped to underpin prices.

But the cost of property edged down again during 2010, to leave house prices at around the same level they started the year.

Economists' forecasts in the Financial Times for house price changes in 2011 range from falls of ten per cent, followed by further double-digit losses in 2012, to rises of two per cent.

Separate research by estate agent Savills also warned that house price falls were likely to be worst in the North, where the housing market is already under pressure and public sector spending cuts will have most impact.

Andrew Goodwin, of Oxford Economics, told the FT: 'Last year's supply shortage has been corrected, which has taken away the major support to prices, but, while the market fundamentals remain weak, they are more favourable than they were in the house price crash of 2008.'

Ian McCafferty, chief economist of the CBI, said sales volumes were likely to be hit harder than prices due to the absence of distressed selling.

Savills warned that the housing market in the North East and the North West looked set to suffer most from Government spending cuts, in research carried out by the Daily Telegraph.

It said housing transactions in these regions were already running at less than half their average during the five years before the credit crunch struck, while repossession figures and new development starts were among the worst in the country.

The group said around 410,000 public sector jobs and £81bn of spending would be cut in the UK during the coming four years, with the North likely to suffer from the impact of this more than the South.

Around 23 per cent of the workforce in the North East is employed by the public sector, falling only slightly to 21per cent in the North West.

Lucian Cook, director in residential research at Savills, said: 'The areas with high repossession levels are exactly those where turnover has been at its lowest and where buyer demand has been at its weakest.

'This has meant both lower price growth in the mini-recovery of 2009 to early 2010 and higher price falls since that date in areas such as the northern metropolitan belt from Liverpool to Hull compared to, say, the commuter heartland of south-east England.'

The group said the housing market in the North had also suffered more from the problems in the mortgage market, as slower price growth meant people had less equity in their properties than in the South.

Meanwhile, research revealed the typical first-time buyer needed a deposit of £28,770 in 2010 - the equivalent of 21 per cent of the value of the home they were buying, according to mortgage lender Halifax.

The figure is nearly three times the typical deposit of £9,865 saved by new buyers in 2000.

Those in the South East now have to save more than £37,000, and people in the South West put down nearly £33,000.

The huge deposits first-time buyers are needed because of house price rises during the past decade, as well as banks and building societies tightening their lending criteria as a result of the credit crunch.

Although the typical age of someone buying their home during 2010 remained unchanged at 29, the Council of Mortgage Lenders estimates that between 80 per cent and 85 per cent of these buyers received help from family and friends in putting together their deposit.

Once these buyers are stripped out, the average age of someone getting on to the property ladder who did not receive financial assistance jumped to 36, up from 33 in 2007.

Despite low interest rates, house price falls and the stamp duty holiday, the number of people buying their first home is still only around half the level seen before the credit crunch struck at 200,000, compared with 400,000 in 2006.

Edited by fellow

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I wonder what goes through a seller's mind when they read headlines like these?

A lurching feeling in the stomach probably. Joking aside there are big big losses coming for many, will there be organised action against banks and VI`s, mass non-payment, legal action stuff like that?

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sorry to dissappoint but 50/56 economists are normally wrong.

have to say though,once this badboy gets going it's going to be 20%+ down in the worst years.10% my @rse.

people get greedy as a herd and sh1t themselves as a herd.

I think if the media run with this, and they will because sheeple attract to property stories like moths to the flame, the herd could be charging properly by end of January? Many media types will have dumped property by now and be ready to salivate over the crash?

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I think sellers either block it out completely or they ring up their equally deluded EA for reassurance.

I have been in EA offices a few times this year over-hearing some panic seller on the phone getting reasurance after some bearish article on prices has appeared in the meeja.

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I think sellers either block it out completely or they ring up their equally deluded EA for reassurance.

I have been in EA offices a few times this year over-hearing some panic seller on the phone getting reasurance after some bearish article on prices has appeared in the meeja.

Then of course these panic stricken sellers seek refuge in what the EA says, which will be wrong. These people will get angry, as will purchasers who cannot afford their mortgage as IR's go up. All in all the EA will be getting it on all fronts.

Fair do's really, they need to take part of the blame for being eager to push up house prices hence inflating their commisions.

I personally think this bust will see the end of EA's as we see them. Good job too.

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I personally think this bust will see the end of EA's as we see them. Good job too.

Interesting (and cheering) idea! I wonder what will replace them? My guess would be some sort of ''self service'' eBay-ish affair - with seller-funded surveys and people making a living taking the deceiving photos that EAs used to for a fixed fee.

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Interesting (and cheering) idea! I wonder what will replace them? My guess would be some sort of ''self service'' eBay-ish affair - with seller-funded surveys and people making a living taking the deceiving photos that EAs used to for a fixed fee.

I would really like to see something like the idea that you have proposed.

Imagine a world where there are a lot of online ads with sellers trying to sell houses as a percentage of survey prices that vendors have paid for where the surveyors are economically and criminally liable for their valuations.

A lot of the bu11shit would disappear pretty quickly in my opinion.

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I wonder what goes through a seller's mind when they read headlines like these?

It depends on how much debt they are in and if they are going to buy another property, most people need somewhere to live after-all ....

If a house falls say 30% the next house they buy will be 30% cheaper and for anyone trading up they could be saving more in pounds.....it is all relative...lower prices mean taking on less debt, that must be a good thing.

Anyone who is sitting comfortably and has no intention of selling...what do they care, the best thing they can do is to pay down the debt....no debt= more income. ;)

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Recently, the comments section of these articles read like a bear orgy - I'd like to think we aren't soley responsibe for this. However, I do enjoy giving a red arrow to strokers like beth who are utterly ignorant to the debilitating effects of expensive housing.

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  • 284 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%



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