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Reuters Poll On U K Property

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LONDON (Reuters) - The housing market shows little sign of gaining upward momentum in the next two years thanks to an uncertain economy and increasingly stretched consumers, a Reuters poll showed on Friday.
House prices will likely end this year
2 percent lower before recouping some losses in 2012
, according to the median forecast of 26 economists. In the last poll, in November (Berlin: NBXB.BE - news) , they forecast prices would be flat in 2011.
Respondents cited budget austerity measures, fresh signs of economic weakness and poor access to credit for first-time buyers as sources of uncertainty -- reflected in the wide range of forecasts, which went from a 10 percent drop in house prices this year to a 3 percent gain.
As homeowners face extra challenges from
rising unemployment and high inflation, 2011 will likely prove a difficult year for homeowners.
"Much will depend on the labour market as to how low the market-clearing price will decline in the coming months," said Peter Dixon, economist at Commerzbank (CRZBF.PK - news) .
"In the event that the fiscal tightening has a bigger effect than anticipated,
there is scope for a lot more downside
, particularly in view of the fact that high price-to-income multiples mean that housing is still expensive to buy."
More than two-thirds of Britons are homeowners, and for 15 years they enjoyed a price boom that almost tripled the average house price, until the global financial crisis took hold.
While house prices in the United States have contracted around a third from their pre-crisis peak, leaving around 10 million homes in negative equity
, British losses have been far more muted -- now just under 10 percent down from their October 2007 peak.
Largely conducted after data showed the UK economy unexpectedly contracted 0.5 percent in the fourth quarter of last year, the poll showed house prices could fall another 4 percent from their current level. There was little consensus on when they might stabilise.
The average house price in December stood at 162,763 pounds, according to Nationwide Building Society -- a level economists still feel is
slightly expensive
in relation to Britain's poor economic fundamentals.
On a scale where 1 is extremely undervalued and 10 is extremely overvalued, they gave UK house prices a median 6.
"Affordability measures are mixed. On the favourable side, mortgage payments as a percentage of disposable income are currently very low compared to past norms," said Howard Archer from IHS Global Insight.
"However, the house price/earnings ratio is above its long-term average."
House prices could gain 1.7 percent in 2012, but analyst forecasts again betrayed a strong sense of uncertainty, ranging from a 10 percent drop to a 5 percent gain.
"It is difficult to see much hope of a strong recovery in 2012 as interest rates could back rising again by then," said John Hawksworth, economist at PwC.
The Bank of England has held interest rates at a record low 0.5 percent since March 2009 but access to mortgage credit has shown little sign of easing, especially for those seeking to take their first steps on the property ladder.
Mortgage approvals, historically a strong indicator of house price trends six months ahead, fell their lowest since March 2009 at 40,000 in December from 45,000 in November, according to the Bank.
The poll showed economists expect a modest recovery to 50,000 approvals a month in six months time and 55,000 in 12.

Poll shows most people are in denial and out of touch with what is already happening in the m,arketplace. Especially the view that houses will drop 2% this year. How about 2% a week folks--thats closer to reality.

Edited by Realistbear

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  • 312 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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