| UK
House Prices Situation: Prices weakening in many areas
UK
House Prices Forecast: Real terms fall in prices in 2008
What
Will House Prices Do In 2008?
Forecasting
future house price movements is a risky
business - especially with the longer-term effects of
the credit crunch still unclear and house prices at the
top of a long period of growth.
With
that in mind, here are six of the most authoritative predictions
for the year ahead:
•
Halifax: 0%
• Nationwide: 0%
• RICS: 0%
• CML (Council of Mortgage Lenders): +1%
• John Charcol (mortgage broker): -2%
• Capital Economics: -5%
The
first thing to note about these figures is that they don't
include the effects of inflation. If prices actually stay
the same next year (i.e. 0% change) then they will fall
in real terms. This is because inflation means that the
value of money decreases each year. (A good example of
this is petrol - £1 now won't buy as much as £1
a year ago).
The
other point that's worth noting is that of the companies
listed above, only Capital Economics has nothing to lose
by house prices falling - the businesses
of all the other forecasters will all be damaged by a
falling house market. Perhaps it is not a coincidence
that Capital Economics forecast is the most negative.
First-Time
Buyer Numbers At 27-year Low
The
number of first-time buyers (FTBs) who entered the market
in 2007 was the lowest since 1980 - and a massive 44%
less than in 2002. In the same period, the average house
price paid by FTBs has increased by 82% - so it's hardly
surprising that FTBs are being priced out of the market.
More
and more FTBs have had to resort to renting or living
in shared accommodation as average house prices
have become unaffordable in 466 of 483 towns surveyed
by Halifax in England and Wales.
Unaffordable
areas are defined as having an average house price of
more than four times the average income in that area.
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