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Housing market: what is your prediction?

January 14, 2009

One thing looks to be sure this year – the housing market has further to fall. Some of the gloomiest predictions are for a further 20 percent slump before a recovery may set in.

Our own Reuters poll of 37 analysts at UK banks, published today, predicts that prices are likely to drop by about 11 percent this year and that it will take until 2010 before it gets better.

How much do you think house prices will fall in 2009?

Comments

If house prices drop by only 11% during 2009, we should expect our current economic malaise to last for decades, not years.

Posted by Steve | Report as abusive
 

Well, let’s remember that most “experts” predicted fairly flat prices last year. Well done there. So if they are predicting 11% this year, watch out! Avalanche.

Posted by Rob | Report as abusive
 

The credit crunch has run for about 18 months since Aug 2007 and UK residential property values have fallen by about 20% across the board during this time.
The question now is will 2009 be worse than 2008 for the overall economy? Answer yes with mass unemployment just starting so knock another 20% off residential values in 2009.
Further falls can be expected until interest rates go negative with say -20% so the Government ends up paying off everyones debt by 20% a year.

Posted by Tim Worlock | Report as abusive
 

I think house prices will fall by 22% by May in real terms the average house in the south will drop to £125.000 and flats will be in the £85.000 range

Posted by David Oakley | Report as abusive
 

11% is a bit of a joke with house prices falling at 2% a month right now. There’s no reason why mark-downs of 2% a month won’t be sustained for the first half, and if we (optimistically) assume price falls slow to 1% a month in the second half, that’s 18% for the year as a whole. The big risk is that prices start falling rapidly again when inflation reappears (perhaps in 2010) and interest rates have to rise as we start paying the price for today’s low interest rates and £.

Posted by Tim | Report as abusive
 

LET THOSE WHO BOUGHT FLATS TO RENT (TO SUPPORT A LAZY LIFE STYLE)TO KIDS WHO WOULD HAVE LIKED TO BUY (BUT PUSHED PRICES OUT OF NEW BUYERS REACH) SUFFER.

A HOUSE IS FOR SECURITY AND A HOME NOT FOR PROFIT.

Posted by jpallen | Report as abusive
 

I wouldn’t be listening to the “experts”. It’s actually astounding that they were so far off the mark, compared to some of the more informed blogs out there.
As for property prices, they need to get back down to a sensible and sustainable multiple of average earnings. Someone needs to be able to buy a home, for their family to live in, for three times their salary of, say £24 000.00.
No, I didn’t say “investment”, I said “for their family to live in”, that’s what houses are for.

Posted by Patrick Baxter | Report as abusive
 

I think the housing market will stabilise by July 2009, followed by a continual but VERY modest rise in value thereon.

It will be a very different property market on the heals of a banking and credit seachange.

The days of wild inclines, extravagant speculation and mad investments are long gone! Period.

Posted by TheTruthIs... | Report as abusive
 

In my opinion London has always been and will always remain a solid market to be in in the regards to property! With that said , areas for investment now need to be selected a little more carefully now then in previously years and returns will take a little longer to be acheived but good money is still their to be made everyday!

The rest of the UK however will struggle this year big time as unemployment climbs……and climbs……and then climbs some more.

Good luck , we are going to need it.

Posted by Aussie Lad | Report as abusive
 

These are very conservative predictions. The recession is only just getting into its stride. The real pain is yet to come. House prices will go down by another 20% before any real recovery, which (apart from a few dead cats bouncing) I don’t expect before 2011. I suspect these estimates come from the same stable as some recent irrelevant references to the situation in the early 90s, when in reality we are in a different league altogether. This crisis is by far the worst since the early 80s, and possibly since the early 70s. The early 90s were a stroll in the park in comparison.

Posted by Matthew | Report as abusive
 

Another 16% drop this year followed by 10% drop in 2010

A total of 42% drop.

Posted by A Saver | Report as abusive
 

My prediction is 30% overall. So that means another 15%, depending whose figures you take for last year’s fall. As unemployemnt will rise to 3 million+, prices will only stabilize in 2010 and may start to rise thereafter. It may take some time. I am sorry to say that I have an uneasy feeling my forecast may be optimistic!

Posted by Jeffrey J | Report as abusive
 

45% fall from August 2007 “Investor prices” will reflect rational value in housing market.

Posted by James | Report as abusive
 

What about London property???

Posted by Buggalugs | Report as abusive
 

Let’s get real about the current financial situation. This is only the start of a major meltdown. Banks will disappear and that will lead to even less liquidity. Their is no quick fix to this and over the next two-three years house prices will have halved from the overpriced 2006-2007 highs. Its simply about demand. Currently those who have been unable to buy previously are waiting until prices drop low enough for them to enter the game. Until then prices will keep falling.

Posted by Dennis Barron | Report as abusive
 

Many sellers have been sitting with their properties at now pre-crash prices and many others still haven’t got the message and are in denial, entering the market with unrealistic expectations.

By the time that works it way through the system I think we could easily see 17%.

Posted by Tim Rabbit | Report as abusive
 

House prices should come down to 35-40% from the last peak.

Posted by RC | Report as abusive
 

I’m not too sure about the disaster scenarios painted here – I think the c 15% is probably reasonable, as having just bought a new house myself a couple of months ago, I see a lot more movement now on the market than even in November. People seem to be back to the market now, but rather than wanting lower prices for say, a four bed house, they are going for a three bed instead. It is not driving the prices down as much as people would expect.

Posted by Victoria | Report as abusive
 

As already mentioned on this site, we are now in the mess we are because of all these overpaid,under qualified ‘experts’who are constantly giving us advice about house prices,finance,investments, etc., etc.,etc.,

If any one is even now going to give these so called ‘experts’any credibility for all their forecasts and God knows what else, they need their heads tested!

All they are capable of doing is telling us in hindsight what shouls have been done, and seem to now want to convince us that their ‘expert’ predictions are to be believed!

If these people got their heads out of their ‘infallble’ computers and all those statistics and reports that they wan’t to convince us with, they would be better advised to stop preaching to us and get some real employment in the real world with the rest of us!(Oh sorry, no jobs now)

Posted by james | Report as abusive
 

One intereresting factoid. Rental prices seem not to have reflected the universally-acknowledged downturn in purchase prices. Part of that is, I’m sure due to deferral, lack of credit facilities, landlords deciding to rely on income rather than pure exchange.
We (in the UK) have come to rely on “the ladder”. Now that the top hungs of the ladder have fallen away, it would be nice to see Our Government step in to help maintain medain income families.

Posted by Marco | Report as abusive
 

Over the last 10-15 years many experts have repeatedly said that house prices could not continue to keep rising. So it should not have come as a shock to people when we get prices dropping.

Personally I don’t care. I’m not going to move and therefore it doesn’t effect me. I think you’ll find that most of the people out there winging about it do not need to move either.

What a pathetic bunch of frightened little people you all are.

In fact it’s because so many people behave like frightened little sheep and stop spending that we have a crisis. If they just bought goods as normal we wouldn’t have a recession of this magnitude. It’s a self fulfilling prophecy.

Posted by Michael | Report as abusive
 

I agree with David Oakley – A family with an average income of, say, 40k have to be able to afford to buy a home again, therefore in the South East, 120k ish for a family home, 80 ish for a flat seems most likely to me. In the nineties, houses just dropped and droped for years – thi recession looks like being much worse

Posted by sue marsh | Report as abusive
 

I predict it will continue to be pointless in 2009 to ask so called ‘analysts’ and experts from the UK banks about anything to do with real life …..

Posted by John Meek | Report as abusive
 

I would prefer a 70-80% decline, but I normally do not get that lucky. I guess it would be around 40-60% (post world war III, which I see in another 2 years time).

 

Its all relative to supply and demand/affordability
Earnings will drop for sure so houses will have to follow
It may take time but people have to be relistic on prices
I guess 20/25% as a average for 2009

Posted by Gary | Report as abusive
 

My prediction is that house prices will fall to a level at which they become affordable without the need to take out ludicrously inflated loans.

And the sooner that the government stops trying to manipulate the market for its own political ends, the sooner prices will fall to that level and the better things will be for everyone involved.

Posted by Andy | Report as abusive
 

So, so much, idle speculation from people that have a vested interest in seeing house prices fall – one can only wonder at their reasoning. Historically, and this can be proved by most people with a calculator, house price inflation over the medium to long term has always shown to be a good investment return. BUT it is a MEDIUM to LONG term investment. Over the last 70 odd years prices have shown on AVERAGE a year on year increase of around 8%. Have confidence the upturn IS just around the corner!

Posted by barry c church | Report as abusive
 

I don’t think I’m pathetic or a frightened little person, but I am hoping for a major decline in house prices so I can buy another one for luck. However, I’m not greedy, so I’ll be happy with another 33% fall in 2009, while in reality expecting something nearer 20%.

Posted by Matthew | Report as abusive
 

Michael’s ill-informed and bad-tempered insult ignores the fact that many of us are hoping for a major house price crash rather than fearing one. I would settle for another 33% in 2009 while hoping, more realistically, for 20%. 50% would “make my life”.

Posted by Matthew | Report as abusive
 

Housing prices will decline a further 15-25%.

Posted by gb | Report as abusive
 

Given the statistics, my reckoning is a 50% reduction from peak to trough.

Posted by Corinne | Report as abusive
 

Ask Mystic Meg or a group of Capuchin Monkeys.

Posted by stephen cole | Report as abusive
 

ive said it has to be 50%, the estate agent who we rent our offices from gets very angry with me!!!
we now dont have a conversation anymore!

Posted by p odonnell | Report as abusive
 

Look on the bright side. No more idiotic DIY home programmes about how to increase the value of your home by £10 grand by fitting a new lightbulb and doing the hoovering.

Posted by nick | Report as abusive
 

The market crashes when some thing is taken away (tax, confidence) now all the money that we have been force fed for years has gone our gread will now eat us. when it stop going down, say end of next finincal year, we will be living in the real world again, no more “live like the beckhams” house prices down buy 50 % from this time last year. no more buy to lets just homes it live in.

Posted by AV | Report as abusive
 

If all this talk of a re-run of the 30′s depression comes to pass surely all bets on house price falls are off. We could easily be looking at 90% discounts or about the same level as the drop in bank capitalisations over the past 18 months which seems logical since they own an ever rising proportion of the equity in properties?

Posted by STW | Report as abusive
 

This talk of hoping the market falls 70%, rather than say 50%, so you can buy at the best price misses one fundamental point. When the market falls to 50%, how will you know to wait for the further fall? You will likely buy in before the trough, or else after it (thinking things can only get worse). I think that most people will buy in too early, bear markets, as bull, go on much longer than you think. The important factor that hasn’t been mentioned is in/deflation. Deflation will exacerbate falls, and inflation will make them look less severe.

For me, I’m assuming deflation for a couple of years, so lets say a fall of 15% for each year will be reasonable. When inflation comes (as it inevitably will given the propensity of the banks to create money) the nominal value of houses will start to rise, as the real value continues to fall for many years.

Lol for the bottom-fishers

Posted by bengt saelensminde | Report as abusive
 

What some of you seem to over look when hoping for a 90% fall in property prices is that if this does indeed happen (which it wont) we will all be out of work and living in armagedon, look at what has happend so far with falls of 20%. This economy is directly impacted by the housing market, so just be carful what you wish for.
Oh and as for my crystal ball, its telling me that prices will stop falling late summer this year!!

Posted by Realistic | Report as abusive
 

The earliest time for a confirmed recovery will be Spring 2010. The housing market typically slows each year during Q4 due to seasonality (even in boom) so a recovery by late Summer 2009 in the current economic climate is extremely optimistic. Banks should start to pass on slightly lower rates in Q4 than what we are currently seeing given the low BOE interest rate which will encourage a more visible recovery in early 2010 as consumers take advantage a these slightly better deals. 15% – 20% drop to go this year.

Posted by Jacko | Report as abusive
 

Although signs are looking more positive with a ‘spring rebound’ I cannot help but think it’s all too premature – surely we will be deep into recession for at least another 6-12 months? I certainly don’t think people who are desperate to sell their houses should un-cross their fingers any time this summer. My guess would be a 15-20% further drop in prices.

 

I feel we are at the bottom and showing signs of recovery. There are fewer homes for sale and lots more sold boards are appearing. With too few homes coming onto the market to satisfy current demand we are likely to see prices edge upwards towards the end of the year. I recall not 12 months ago predictions that the UK housing market would never recover – what stupidity. Now a few journalists are losing their jobs – talking the market down is slowing – great news.

Posted by Adam | Report as abusive
 

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