According to a survey of 225 members of the Society of Business Economists (SBE) 60% of their members suggested house prices will not recover their peak level (July 2007) until 2012.
56% of respondents thought house prices will fall by 20% from their July peak; some believed prices could fall by 30% in nominal terms.
Meanwhile the CBI suggested the UK economy faces its worse outlook since 1992. The CBI forecast rising inflation, rising unemployment and slowing growth. They say the rise in oil prices combined with slowdown in consumer spending is causing an unpleasant mix of rising prices and falling output.
The rise in unemployment could cause a further rise in home repossessions which will do nothing to help improve the housing market.
If inflation rises to 3.8% as predicted it will present an unwelcome dilemma for the Bank of England. Homeowners hoping for rate cuts in the near future, are likely to be dissappointed.
3 comments ↓
[...] Some people believe that the above factors mean that house prices could actually fall a long way upto 30% or even 50% in real terms. Economists predict 20% fall [...]
I think the UK housing prices will continue to fall as long as the economy is in recession. Once the UK economy starts to recover through government intervention particularly, consumer confidence will go up again and that will at least contribute to an increase the demand for housing in the UK.
I predict that this economy will fall much further yet… There are many reasons for my prediction but here is a big one…
The FSA is talking about having new mortgage regulation (which is good practice but too late coming, it’s the right solution at the wrong time) that limits people to borrowing no more than 3 times income with at least 5% down. Well, With the average household income (this is assuming your free of other debts too) being just under 30K per year, The average family will only be able to afford (with 5% down) a £90,000.00 house!.. The average house price is a around £160,000. See the problem??? As a result the housing market will languish until property looses about 45% more off current values! At which point people can afford to start purchasing property again.
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