Britain in Denial Over Possibility of Falling House Prices

Britain in Denial Over Possibility of Falling House Prices

17:19 PM, 5th December 2011, About 12 years ago

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Two-thirds of people believe house prices will not drop next year despite warnings from banks and governments that the global economy is on the brink of slipping back in to recession.

One in five predict prices will rise by the end of 2012 while around 40% expect no change despite property prices sitting around the same level as those at the start of 2006, before the property bubble burst.

Less than a third of people believe property prices will drop, says new research from online web portal Rightmove.

Rightmove director Miles Shipside said: “The public’s belief in the value of bricks and mortar seems to defy the deteriorating economic situation.

“This is a clear message that the majority of consumers view the property asset class to be as safe as houses.”

The firm’s findings suggests most people believe that the property market will splinter in to regional markets – with London leading the way, while Wales languishes behind the rest of the country.

Special conditions in the capital insulate home prices – these include an influx of rich foreign investors buying properties in the West End and generally higher earning for homeowners, especially in the City.

London has also benefitted from huge investment for the Olympics next July and the start of the crossrail project linking the east of the city with Heathrow.

“Although the majority view is the UK housing market will avoid price falls in 2012, local variations highlight how patchy confidence can be,” said Shipside.

“The wealthier middle-to-upper price brackets may be feeling fairly blast-proof from any further economic eruptions, and see a less turbulent outlook. Meanwhile some of the more cash-strapped terrace and semi dwellers may feel far more exposed to the negative pressures of reduced mortgage availability and job uncertainty.

“It should be remembered that in spite of the overall confidence expressed in this survey for property prices, transactions volumes are still well down on historic norms. Economic stability in the UK and Eurozone will be needed before many are willing or able to re-engage with the property market.”

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