The forecasts for the property market remain bleak according to many industry specialists including; economists, surveyors, mortgage lenders and trade bodies. This is highlighted by the fact that a recent report from The Royal Institution of Chartered Surveyors indicated 23% more of its members anticipate falls in house prices during the final quarter of 2011.
House Prices to Fall 10%?
It is widely acknowledged that over the next 3 – 5 years house prices will fall around 10% in real terms due in part to the eventual increase in inflation and the continued lack of confidence in the market. With nominal house price increases expected to fall behind RPI inflation this can be the only outcome over the coming years.
It is thought by economic forecasters that the recent schemes aimed to assist those looking to Buy a Property or Sell a Property initiated by lenders, the government and home builders are merely papering over the cracks of what we all know is a much wider economic problem outside of the property markets control. There could yet be reprieve, however if recession is avoided and over the next few years wages rise homes in the UK could once again become affordable without the risk of negative equity.
Conflicting Opinions on House Prices
There are still widely contrasting thoughts however on the direction of the market mainly due to impending threat of another global recession. The disparity still remains between what the average UK house price is with Rightmove showing asking prices of £239,672 and at the other end of the spectrum Halifax have actual sales prices at £161,743. It has been highlighted that in order to predict the future of house prices we must first know the ‘correct’ historic and current levels, although this is difficult as there is no single defining rule of what the average current house price is.