“Substantial” house price falls this year and next

| August 3, 2009 | 0 Comments
”"Substantial"

The National Housing Federation (NHF) has produced an alarming forecast for the housing market in England.

The body, which represents not-for-profit housing associations, is predicting “substantial” price falls in 2009 and 2010 followed by a rise of 20% by 2014.

According to research undertaken by Oxford Economics for NHF, house prices in England will fall by 12.2% this year and a further 4.6% in 2010 before stabilising in 2011 with a 1.1% rise.

Price increases of 7.5% in 2012; 8.4% in 2013, and 6.8% in 2014 are then expected.

The NHF warns that some homeowners who bought during the peak of the market in 2007 are therefore likely to remain in negative equity until 2014.

The highlights of the study are as follows:

House prices in England in 2013 will be 3% below their pre-credit crunch peak of 2007, but by 2014 they will be 3% higher.

An average price property in London purchased in 2008 for £331,500 will drop to £268,600 in 2010, before rising to £354,900 by 2014.

The average East Midlands home will be worth less in 2014 at £165,300 than it was in 2007 at £172,500.

According to the study, the average house price in the English regions in 2014 will be:

North East – £155,700 (compared to £148,100 in 2007); North West – £159,300 (£162,000 in 2007) Yorkshire & Humberside – £175,600 (£163,600 in 2007); East Midlands – £165,300 (£172,500 in 2007); West Midlands – £180,500 (£178,400 in 2007); East of England – £235,400 (£231,100 in 2007); London – £354,900 (£329,200 in 2007); South East – £293,600 (£267,000 in 2007); South West – £225,400 (£224,500 in 2007).

NHF chief executive, David Orr, comments: “Our new research shows that while house prices are falling in the short term, they will inevitably increase in the long term because of a fundamental under-supply of housing.”

He adds: “Until lending is freed up, young and lower income households without access to large deposits will be locked out of the market.”

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