House prices are set to fall by an average of 10% next year, according to forecasters, with some experts expecting the decline to bottom out after summer.
There is a wide disparity between the most optimistic forecasts – that the market will remain flat – and the most bearish predictions of a further 20% fall in house prices.
The only consensus among the forecasts is that there will be no growth in the market next year. Such is the level of uncertainty, given the precarious state of the economy, that Halifax and Nationwide, two of the largest mortgage lenders, have decided not to release house price forecasts for next year.
Nationwide said it could be irresponsible to make a forecast, given the market’s dependence on confidence. Halifax said its decision related to its merger with Lloyds TSB. Both forecast at the start of this year that the market would be flat. It fell by 14-15 per cent in the year to the end of November, according to the lenders’ own indices.
Other forecasts reveal a range of 20-35% in peak-to-trough falls in the housing market.
The RICS said house prices were likely to decline by about 10% next year because of continued caution among lenders and the worsening economic climate. Its peak-to-trough prediction is a fall of at least 25%. Transaction numbers, which have fallen to record lows, are expected to increase more than 10% during 2009.
Assetz, the property investment company, said its central forecast was that house prices would fall 5% during the year. The bottom of the market was likely to occur after the summer, added Stuart Law, chief executive.
Propertyfinder.com expected prices to fall by about 12 per cent, depending on the mortgage market. The worst was already over for transaction levels, it said. Hometrack believed prices were set to fall further next year, by about 10 per cent on average.