House prices could bottom out by Christmas

| April 14, 2009 | 0 Comments
House prices could bottom out by Christmas

A leading research agency is predicting that the property market downturn will bottom out by Christmas.

According to a report in the Daily Telegraph, Lombard Street Research (LSR) is basing its forecast on affordability, which is now below the long-term average, reflecting the fact that prices have fallen by 20%, in nominal terms, in the past 18 months.

The firm’s affordability index, which is produced in conjunction with the newspaper, shows that prices across the UK are currently offering better value than their long-term average, for the first time in five years.

The independent macroeconomic forecasting agency of twenty-years standing also points out that a combination of falling prices and low interest rates means there are bargains to be had for those who can obtain finance.

LSR believes that these factors will prevent further falls of between 15% and 30% forecast by gloomier commentators who have based their predictions on a continued rise in the number of homeowners in negative equity and soaring job losses.

In addition, LSR expects the slowdown in the number of new homes being built to underpin the market.

Recovery will, however, be slow.

In related news, the Council of Mortgage Lenders has today reported a 4% month-on-month rise in mortgage approvals for house purchases in February.

Loans to first-time buyers rose 7%, with the average first-time buyer mortgage at £95,000, down from £114,000 in February of last year.

Those getting a foot on the property ladder borrowed an average 2.95 times income, down from three times in January.

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