Despite the governments best efforts and record low mortgage interest rates UK house prices still continue to just keep buoyant. In August average UK house prices were up just 0.1% over the previous month which is a drop of just over 0.3% over the same period last year. Some say that this indicates a promising sign of things to come, many others say this does not portray an accurate representation of the UK market.
According to The Land Registry, London house prices are artificially inflating the countries figures as a whole. London being the only city where house prices continue to rise albeit by a very small margin. The average London house price has risen by about 2% over the last 12 months compared to the rest of the UK which has seen a drop of over 2.5% overall from the property market peak back in 2008.
Stagnation
One of the key areas which is causing the lack of fluidity in the UK property market is the unwillingness of both buyers and vendors to move in price. Sellers are not willing to cut their asking prices and potential buyers are nervous about baying too much in the current market. This is leading to very slow movement with the average property staying on the market for 5 weeks longer than they did three years ago. Those sellers who can afford to are holding out for better offers rather than letting their property go at a reduced rate.
Property prices going forward
The outlook for the next two years is not a good one. Most estate agents are in agreement that the property market will continue to stagnate at best with many forecasting a price fall over the next 12 months before we see any sign of recovery. Many experts suggest that the average house price will fall by over 10% in real terms over the next four years.
Some optimists say that in reality this could be good for first time buyers if wages rise by a greater degree over the next few years property could become more affordable for first time buyers. I for one am not convinced. With mortgage lenders reluctant to lend and the economy as it is this optimistic outcome is unlikely to show itself in any real numbers.
Experts forecasts
- CEBR forecast prices rising from 2011 to 2015 by 14%
- The NIESR says house prices will fall 10.5 per cent in real terms over five years, down 4.5 per cent this year and 1.5 per cent in each subsequent year.
- Rightmove says asking prices will slip in 2011 - predicting a 5 per cent fall over the year
- RICS forecasts a 2 per cent fall in house prices in 2011, but says property will not dip by more than 5 per cent
- Halifax and Nationwide predict prices to be flat in 2011
- Hometrack forecasts a 2 per cent decline in 2011
