An average £8000 could be wiped off property prices this year
January 15, 2008
Over recent months there has been much speculation with regards to what will happen with property prices over the course of 2008, with a range of surveys and studies all pointing to the fact that house prices are set to fall, and have indeed already fallen over the final months of 2007. Officials from John Charcol recently predicted that house prices will fall by 2% over the course of this year, with other industry officials largely predicting that house prices will either stagnate or will continue to fall.
A recent report based on research carried out for the Daily Telegraph has shown that house prices could actually fall by around 4% this year, which would wipe an average of £8000 off property prices across the UK. If there is a 4% fall this will be the first annual drop in fifteen years according to industry officials. Experts have also stated that affordability is 12% lower at the end of 2007 compared to the end of 2006.
One industry official stated: “We currently expect house price falls of three to four per cent. I think life will be worst in London. A four per cent fall would take some £8,000 off the value of the average home of around £200,000.”
It is thought that a drop such as this would make it more affordable for first time buyers to get onto the property ladder. However, even with lower house prices first time buyers and homeowners that wish to move may experience another hurdle in the form of being able to get finance from lenders who are tightening their belts as a result of the credit crunch.
It is also widely expected that interest rates will fall over the course of this year, with many industry officials predicting that there will be two or three interest rate cuts over the course of the year, and some believing that interest rates could fall as low as 4% by the end of the year.
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