Most economists believe house prices will continue to drop this year although they differ on the extent of likely declines. Financial Times.
This is in contrast to a year ago, when the differences between economists’ forecasts outweighed any similarities.
Almost all the economists contacted by the FT believed the housing outlook had deteriorated since the start of the year and had revised their forecasts accordingly for the total fall in house prices.
Simon Rubinsohn of the Royal Institution of Chartered Surveyors made a relatively optimistic prediction of a 7% fall in cash prices, while Jonathan Loynes of Captial Economics, a consultancy that has long believed prices must decline, predicted a 20% drop.
The consensus has to a large degree come about because prices are definitively coming down, according to Diana Choyleva of Lombard Street Research, who predicted a 10% fall from peak to trough.
The economists’ opinions are unlikely to be related to personal circumstances. All the experts polled were owner-occupiers with no plans to sell, so those predicting tumbling house prices are not renting accommodation and waiting for a cheaper market in which to buy.
Even if it were cheaper to sell and rent, there remains a value in staying put – moving involves large transaction costs and the risk of mistiming the move, according to Ben Broadbent of Goldman Sachs.
