Tuesday, December 23, 2008
“new home prices look almost certain to fall much further”
Gloomy analyst Capital Economics has predicted the underlying value of new-build properties will experience a peak to trough fall of 40-45%, up to 10% more than the wider market. The firm highlighted that as house-builders’ operational survival directly depends on their ability to sell their properties, they may be more willing to drop property prices than existing homeowners will be. Capital Economics said it believed the credit squeeze has affected demand for new-build homes more than it has affected demand for second-hand homes as lending criteria have been particularly tightened for first-time buyers and buy-to-let investors, the two buyer groups who have the strongest preference for new properties.