House price predictions for 2010

House price predictions for 2010

Despite the expectation that the price rises of recent months would abate, they still seem to be climbing. Citywire looks at what the experts expect to happen next year.

What is happening now?

You may be slightly confused about what’s happening to house prices. Despite the expectation that the price rises of recent months would abate – what with high unemployment and tough mortgage financing conditions – they still seem to be climbing.

The most recent measure of house prices came from Halifax, which reported a 1.4% increase in November. Nationwide reckons prices rose 0.5% and are now similar to early 2006 levels at an average of £162,764.

You can join the debate on why house prices are still rising here.

The current price rise may look a little suspect, but for now, what will happen next year as the jobless toll continues to rise and interest rates start climbing again?

The bank

Halifax expects no change in house prices

Martin Ellis, housing economist at Halifax, says demand has increased largely due to the improvement in affordability for existing homeowners and first-time buyers who can raise the necessary deposit.

But prospects for the market will depend on whether there is a significant increase in the supply of properties for sale. 'Overall, our view is that house prices will be flat during 2010,' said Ellis.

The ratings agency

Fitch Ratings warns of a ‘double dip’

UK house prices face the prospect of a 'double-dip' in the next few years amid high unemployment and constrained lending conditions, Fitch Ratings has warned.

Delivering a bleak outlook for house prices, the ratings agency believes house prices will come down by nearly a third from the peak seen in 2007.

The estate agents

Carter Jonas expects house prices to remain stable

Catherine Penman, head of research, said: ‘While the overall picture will remain positive, the residential market will remain tentatively balanced throughout 2010. Certain properties, however, will continue to defy market conditions and sell well, in many cases at 2007 levels.

‘Growth next year will be strongest in prime Central London and ripple out most quickly to the South East and prime centres, such as Oxford, Cambridge, Winchester, Bath and Harrogate. However, even the most prime markets are exposed by potential interest rate increases and rising unemployment.’

The economists

Howard Archer expects a 5% fall

Howard Archer, UK economist at IHS Global Insight, now expects house prices to fall 5% in 2010, well below his estimate earlier this year of a 10% fall. 'We remain sceptical that the house price rally seen since early-2009 can be sustained for much longer,' he said.

'Housing market activity is still at a low level compared to long-term norms, unemployment is high and still rising, earnings growth is low and still falling, and house price/earnings ratios are currently moving back up.'

The surveyors

The Royal Institution of Chartered Surveyors says prices to continue to rise

Simon Rubinsohn, RICS chief economist said recently: ‘Despite the probable ending of the extended zero rate band for stamp duty at the end of the year, the likelihood is that prices will continue to rise in the early part of 2010. Although the fresh supply of property is beginning to pick up, it is continuing to lag behind the increase in buyer interest which suggests that, at least in the near term, the market will continue to tighten.’

The property consultants

Jones Lang LaSalle expects a fall of around 7%

James Thomas, head of residential investment at the property consultants, believes that the removal of the stamp duty incentive in the Pre-Budget Report could produce a setback for property prices across the board. ‘There are already signs of the recent resurgence in house price growth slowing and our latest Residential Market Forecast anticipates a fall in average UK house prices of around 7% in 2010,' he said.

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