A recent poll shows that UK house prices are expected to drop another 4% this year.
The Reuters poll conducted amongst 23 ‘market watchers’ last week will come as unwelcome news to those that have already seen the price of their property fall by up to 20% in the last couple of years.
The good news though is that according to the poll results house prices will stabilise next year.
That is of course if there are not more forced sellers coming to the market as the economic situation worsens.
There is also the question of the London market which, as it continues to outstrip the rest of the UK, skews the overall figures somewhat.
And when the lustre of the 2012 Olympics finally falls away one wonders if the long term economics of the city will continue to be able to underpin such a strong housing market.
Be in no doubt that there is a massive un-funded demand for owner-occupier housing in the UK. The dream of home ownership is still immensely strong in the UK. It’s just that a lack of financial wherewithal at today’s prices is preventing most people from buying. Especially the first time buyers.
But dreams don’t cut it, or we’d all be driving Ferraris.
Gone are the days when wages and deposits could be massaged to get you the house you wanted. Now the money talks loudest and people can only get into the house, bought or rented, that they can afford.
So even with fewer houses around leading to a supply/demand imbalance, prices are not going to go up any time soon. And without forced sellers prices will not trend down fast in the near future.
What we will be seeing is a rise in the practice of ‘Gazanging’, where the house seller decides that they no longer want to sell, so pull out of the deal leaving the buyer high and dry and out of pocket.