House prices to suffer 'significant correction' in 2010

Wookster

House prices are expected to suffer a “significant correction” this year as figures show recent rises are beginning to lose momentum.

By Myra Butterworth, Personal Finance Correspondent
Published: 11:22AM GMT 26 Feb 2010

Economists suggested the drop marked a change in fortunes for the housing market which has seen prices rise by 9.2 per cent during the past year Photo: GETTY
Values dropped 1 per cent in February, the first decline in 10 months, bringing the average price of a home in Britain to £161,320, according to Britain’s biggest building society Nationwide.
Economists suggested the drop marked a change in fortunes for the housing market which has seen prices rise by 9.2 per cent during the past year.

Martin Gahbauer, Nationwide’s chief economist, said: “The market may have lost momentum in early 2010 as the stamp duty holiday ended and house-hunters were obstructed by the icy weather.
“Even without the impact of stamp duty changes and the snowy weather, it would have been surprising to see house prices maintain the very strong upward momentum seen for most of 2009.
“In light of low growth in household incomes and elevated levels of unemployment, house prices were beginning to move ahead of the recovery in general economic conditions.”
Howard Archer, an economist at Global Insight, said: “House prices will suffer a significant correction in 2010 and will probably be no better than flat over the year. The price rises that have been seen since early-2009 are out of kilter with the overall economic fundamentals.”
And David Smith, a partner at estate agents Carter Jonas, warned: “There is every chance prices will fall back in the second half of the year, particularly if interest rates rise and, as many still think, the economic recovery continues to drag.”

Just to cheer you up on a Friday evening Hamish.

Euphoria1z

thought we just had a correction? i reckon no real movement over the next 2-3 yrs personally.

brit1234

Euphoria1z wrote: »

thought we just had a correction? i reckon no real movement over the next 2-3 yrs personally.

No, it was stopped correcting it self when they slashed interest rates to 0.5%, cut stamp duty and all the other stimulas.

At the end od the day even now house prices are extremely over valued and a long way still to fall.

Euphoria1z

what if the prices never needed a correction? what if they arent overvalued? as people keep saying, the value is what ever someone is prepared to pay for it. what if people (or the majority of people) are prepared to pay what the seller is asking for within reason? what if there are more people earning in the higher wage bracket than there are in the lower bracket and can comfortably afford the property? (obviously i dont know but just a thought)

Mr.Brown_4

Euphoria1z wrote: »

what if the prices never needed a correction? what if they arent undervalued? as people keep saying, the value is what ever someone is prepared to pay for it. what if people (or the majority of people) are prepared to pay what the seller is asking for within reason? what if there are more people earning in the higher wage bracket than there are in the lower bracket and can comfortably afford the property? (obviously i dont know but just a thought)

Well if all your ifs are correct then they are not over valued. However you are completely and utterly wrong.

de1amo

its affordability that deems if they are over valued-average wage against average value--if you say 161k is the average then a multiple of 4 salary to afford it would be 40k--and i used to think the average salary was near 20k

DaddyBear

Already started in Bath. Now have four consecutive negative months according to the land registry, and that includes -0.3% last month despite +2% nationally (mostly due to a large increase in London). Now back to double digit drops from peak.
TIMBER

ess0two

Some wishful thinking on this thread.The large drops have been and gone,the future will be full of minor ups and downs.

IveSeenTheLight

de1amo wrote: »

its affordability that deems if they are over valued-average wage against average value--if you say 161k is the average then a multiple of 4 salary to afford it would be 40k--and i used to think the average salary was near 20k

The thing to understand is that not everyone buys, therefore currently the top 70% of earners (because 70% of the property is owner occupied) need to be averaged

de1amo

the boe is reigning in the money supply and then will start sucking up all the liquidity--with interest rate rises--no one will be on any mortgage deals because of 'exceptional 'circumstances and rising LİBOR rate - i have seen what 15 pc interest rates do to a housing market that wasnt as overvalued as this--it wasnt pretty and left many people in debt for many years-if people think we are out of the woods regarding the housing market they are living on cloud cuckoo!!!
But to keep the prices at this level the market needs first time buyers and rents for buy to lets to be sustained and both these are in reverse!-i am not a top 70pc earner for sure!!

Euphoria1z

Mr.Brown wrote: »

Well if all your ifs are correct then they are not over valued. However you are completely and utterly wrong.

either that or your completely and utterly wrong.


to someone who doesnt make very much money (like me) house prices are over valued and damn expensive.

to someone whos rich and has tonnes of money, the prices probably arent over valued.

i can see the rich getting richer and poor getting poorer like in 3rd world countries.