13
Sep
House prices: What next?
Simon Lambert Property Editor of
www.thisismoney.co.uk reports: House prices
rose for the second month in a row in August, according to Halifax,
which said the property market has steadied after the recent rally.
Halifax recorded a 0.2% increase in the average property price in
August, contradicting rival lender Nationwide's report that they
fell by 0.9% in the same month.
The Nationwide report was seized on as yet more downbeat news
emerging from the property market, but its housing economist Martin
Gahbauer said after the market getting ahead of itself, 'the
current correction is not an unhealthy development'. Howard
Archer, chief UK economist at analysts IHS Global Insight suggests
prices will be 10% lower than their mid 2010 levels by the end of
2011. His forecast was echoed by Andrew Goodwin, senior economic
advisor to the influential Ernst & Young ITEM Club, who said
annual price falls of between 3% and 5% will be seen over the next
12 months, before house price stabilise.
However, economists and property watchers agree that the effects of
a slowdown will be felt differently across the UK and a 2008-style
all out crash is less likely than a period of stagnation.
The threat of spending cuts and public sector cutbacks is more
likely to affect areas outside London and the South
East and hit them harder. Meanwhile, in the more buoyant
capital and commuter areas, good properties in desirable locations
are likely to prove most resilient.
Richard Hatch, head of residential at property consultancy, Carter
Jonas said: 'The market is simply readjusting after getting ahead
of itself. The market is stabilising, not collapsing. 'Last year,
there was a major disconnect between the property market and the
economy. House prices rose at a rate that was simply unsustainable
and a degree of correction was always on the cards.'
Many reports raise the spectre of further chunky falls, but tend to
point more towards a longer period of stagnation, where house
prices rise at less than the rate of inflation. And this would not
necessarily be a bad thing for the market as a whole. Property
remains overvalued and until it slips back into more affordable
territory, the economy will remain hamstrung by the property market
and buying a house will continue to be a gamble. End