Estate Agents Predict House Prices Will Drop in 2012

by Property118.com News Team

15:47 PM, 22nd December 2011
About 9 years ago

Estate Agents Predict House Prices Will Drop in 2012

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Estate Agents Predict House Prices Will Drop in 2012

House prices are likely to drop by an average 3% over the coming year, predict estate agents.

The number of homes sold may climb, but wider economic problems and the fear of losing jobs will keep the market flat, says the Royal Institution of Chartered Surveyors.

Even increasing house sales to around 880,000 for the year will see the market running at half the 1.67 million properties bought and sold in 2006.

Estate agents are expecting a tough six months, with little help to improve the market from government schemes supporting first time buyers like the mortgage indemnity scheme.

Their view is supported by the Council of Mortgage Lenders which has already warned that mortgage funds available for 2012 are unlikely to exceed this year’s £130 billion.

Buy to let is likely to continue performing well, says RICS, with a strong demand to rent from would-be first time buyers who cannot raise funds to purchase a home.

Simon Rubinsohn, RICS chief economist, said: “The general economic climate is likely to be the biggest influence on the residential property market next year. Prices could edge a little lower as unemployment continues to rise. However, the lack of supply in the market is likely to prevent any significant house price declines.

“Transaction levels should see a slight increase, although mortgage lending is likely to remain subdued which will limit the scope for improvement. As a result of this, the lettings market will remain firm which means that rents are likely to increase further, albeit at a slower pace than in 2011.”

Meanwhile, while would-be buyers do not have the finances to purchase and the number of homes available to let dwindles, the number of empty homes in England has risen to 662,105, according to the Halifax.
The number has climbed by almost 2% over the past 12 months.

An empty home is a property that is between occupants, undergoing modernisation, in disrepair or awaiting demolition.


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Comments

12:47 PM, 23rd December 2011
About 9 years ago

I think house prices are going to fall by more than 3%.  They are extremely overvalued still on a traditional basis (ie in an unsustainable bubble) barely been held up by low interest rates but in reality falling slowly/greatly when you take inflation into account.

In 2012 high actual inflation will erode the effect of low interest rates as well as higher LIBOR rates which will push up mortgage costs.

Big falls coming.

16:43 PM, 26th December 2011
About 9 years ago

Lets hope so;  this means most landlords will be trapped into retaining their properties for rent.
Buyers will find it even more difficult to obtain a mortgage under the new onerous residential mortgage criteria which will will mean even more rental demand.
Surveyors will continue to down value propties meaning even larger unachievable deposits will be required, creating even more rental demand.
Not many people wanting to sell have a lot of equity.
So landlords prosper out of these circumstances and it gets worse for prospective property purchasers.
Most landlords have adjusted to a long term market plan,  15 years plus so we are not that bothered about capital appreciation at the moment.
We have time on our side.
FTB's don't.
So for landlords providing interest rates remain low;  which they will then it looks like a profitable time ahead for BTL landlords.


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