Few signs of light in gloomy housing market

Although interest has perked up, things aren't expected to improve just yet.

'It's always darkest before the dawn" is a well-worn phrase, and those involved in the UK property market – estate agents, developers and sellers – hope that it proves true as they prepare to bid goodbye to 2008. The housing market, it seems, has never been in such a parlous state. Officially, prices are about 15 per cent lower than they were a year ago but the reality on the ground is probably more akin to a quarter knocked off property values since their height in the third quarter of 2007.

Henry Pryor, an independent housing-market analyst who successfully called the top of the market in 2007, reckons the 15 per cent fall recorded by the Halifax is an underestimate. "This figure reflects only a fraction of the few sales which are going on at the moment. We have homes sold at auction. We also have – in central London – buyers from abroad who are beginning to take advantage of sterling's slide against the euro. For these buyers, prices are not 15 per cent lower than they were a year ago. They are closer to 45 per cent lower, when currency moves are taken into account."

Meanwhile, repossessed homes sold at auction – the only part of the market to see increased activity of late – are going for between 40 and 50 per cent below what they'd have fetched on the open market a year ago.

And worse could lie ahead. Unemployment is rising rapidly and could reach three million next year. Fewer jobs means mortgage payments missed, and the Council of Mortgage Lenders – says that repossessions will be up by two-thirds in 2009. This comes hard on the heels of a likely 50 per cent rise in repossessions during the course of this year.

"In 2008, the property market fell so sharply due to the side effects of the credit crunch. Mortgages dried up as did transactions and the whole market in effect seized. This will continue into 2009 but will be exacerbated by the fact that lots of people are going to lose their jobs. As a result, there will be distress sales and this will push prices lower still," Mr Pryor said.

But how low could prices sink? It is from the City that the best answer may come. "The median prediction among traders is that from peak to trough we will see house prices fall 46 per cent. The height was reached in the third quarter 2007 when average UK house prices were around the £200,000 mark by 2010/2011. This is predicted to be £109,000," said Peter Sceats, director of real estate derivative broker Tradition Property.

Mr Sceats's firm runs a market that is based on moves in the Halifax house price index. Traders in effect place bets on where UK property prices will move in future. If the core prediction among traders in this market is correct, then it means 2009 could be a whole lot worse than 2008. During the past year, the average UK house price according to the Halifax index has declined to £163,605. There could be a further £50,000 or so to come off.

But some of the big beasts of the property world are steering clear of calling the market. For example, Nationwide simply says that prices will continue to fall; a similar line is adopted by the Royal Institution of Chartered Surveyors and the CML. The Halifax, meanwhile, predicts a 20 per cent fall over 2008 and 2009 but most of that has already happened.

But David Bexon, managing director of property website Smartnew homes.com, believes that sellers will start to see some "green shoots" of recovery in late 2009. In short, he suggests that the worst of the falls could be over. "New-build firms have been heavily discounting their sale homes but this will come to an end as projects have been mothballed," he said. "This means that there will be lower supply of new houses which will have the effect of cushioning price falls."

"Outside of new build, we've already seen prices come off considerably, and those in a job could be looking at the fact that homes are much more affordable than they once were – relative to incomes. Although mortgages are very tight at the moment, this could ease a little during 2009 and people who are currently saving for a deposit will be better placed to buy. The demand is still out there."

Estate agents recorded a slight uptick last month in the number of potential buyers registering an interest – although, admittedly from a low base. Transactions are still at record lows but it seems some hardy would-be buyers are seeing how the land lies. Kerry Chaloner from financial planning firm Armstrong Watson reckons that 2009 will present an opportunity to snap up a bargain. "If you have some money to invest, now is potentially a good opportunity to take a long-term investment in the property market while prices are low. People should remember that for the next few years it is unlikely the country will experience the interest rates of the 1970s which exceeded 15 per cent," he said.

But according to Mr Pryor, buyers may be best advised to remain on the sidelines, at least for now. "From most people's perspective, with the way the economy is, it would be lunacy to pile into the housing market now," he said. "The only people I see being well placed are older people with no mortgage looking to trade down because they still have a lot of equity. Those at the bottom of the market will be a long time coming back. The bottom of the market will move into view in 2009 but it won't feel like it. In fact, I don't see confidence returning until 2010 at the earliest."

News
people
News
A survey carried out by Sainsbury's Finance found 20% of new university students have never washed their own clothes, while 14% cannot even boil an egg
science...and the results are not as pointless as that sounds
News
politicsIs David Cameron trying to prove he's down with the kids?
News
Dominique Alderweireld, also known as Dodo de Saumure, is the owner of a string of brothels in Belgium
newsPhilip Sweeney gets the inside track on France's trial of the year
PROMOTED VIDEO
News
Cumberbatch was speaking on US television when he made the comment (Getty)
people
Life and Style
tech
Arts and Entertainment
Tom DeLonge, Travis Barker and Mark Hoppus of Blink-182 pictured in 2011.
musicBassist Mark Hoppus and drummer Travis Barker say Tom Delonge is 'disrespectful and ungrateful'
Sport
football
Arts and Entertainment
Olivia Colman and David Tennant star in 'Broadchurch'
tvBroadchurch series 2, episode 4, review - contains spoilers
Sport
cyclingDisgraced cycling star says people will soon forgive his actions
News
Britain's Prince Philip attends a Garden Party at Buckingham Palace in London
people
Arts and Entertainment
Ed Sheeran will play three sell-out gigs at Wembley Stadium in July
music
News
i100
News
Lena Dunham posing for an official portrait at Sundance 2015
people
Arts and Entertainment
Under the skin: Sarah Kane in May 1998
theatreThe story behind a new season of Sarah Kane plays
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Client Services Manager - Relationship Management - London

    £30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

    Recruitment Genius: Credit Controller / Customer Service

    £18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

    Guru Careers: In-House / Internal Recruiter

    £25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

    Recruitment Genius: Tax Assistant

    Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

    Day In a Page

    Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

    Auschwitz liberation 70th anniversary

    Woman sent to three Nazi death camps describes surviving gas chamber
    DSK, Dodo the Pimp, and the Carlton Hotel

    The inside track on France's trial of the year

    Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
    As provocative now as they ever were

    Sarah Kane season

    Why her plays are as provocative now as when they were written
    Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

    Murder of Japanese hostage has grim echoes of another killing

    Japanese mood was against what was seen as irresponsible trips to a vicious war zone
    Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

    Celebrities call on David Cameron to take more Syrian refugees

    One young mother tells of torture by Assad regime
    The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

    The enemy within

    People who hear voices in their heads are being encouraged to talk back
    'In Auschwitz you got used to anything'

    'In Auschwitz you got used to anything'

    Survivors of the Nazi concentration camp remember its horror, 70 years on
    Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

    Autumn/winter menswear 2015

    The uniforms that make up modern life come to the fore
    'I'm gay, and plan to fight military homophobia'

    'I'm gay, and plan to fight military homophobia'

    Army general planning to come out
    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea