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."

Sport
Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Voices
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
Sport
world cup 2014
Sport
Popes current and former won't be watching the football together
PROMOTED VIDEO
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
books
News
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
News
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
film
News
business
News
Mick Jagger performing at Glastonbury
people
Arts and Entertainment
Currently there is nothing to prevent all-male or all-female couples from competing against mixed sex partners at any of the country’s ballroom dancing events
Potential ban on same-sex partners in ballroom dancing competitions amounts to 'illegal discrimination'
Sport
Germany's Andre Greipel crosses the finish line to win the sixth stage of the Tour de France cycling race over 194 kilometers (120.5 miles) with start in Arras and finish in Reims, France
tour de franceGerman champion achieves sixth Tour stage win in Reims
Extras
indybest
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
News
people
Finacial products from our partners
Property search
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

    Business Analyst Consultant (Financial Services)

    £60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

    Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

    £60000 per annum: Harrington Starr: A leading provider in investment managemen...

    AVS, JVS Openlink Endur Developer

    £600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

    Technical Support Analyst (C++, Windows, Linux, Perl, Graduate)

    £30000 per annum: Harrington Starr: A global leader in trading platforms and e...

    Day In a Page

    A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

    A History of the First World War in 100 Moments

    Peace without magnanimity - the summit in a railway siding that ended the fighting
    Scottish independence: How the Commonwealth Games could swing the vote

    Scottish independence: How the Commonwealth Games could swing the vote

    In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
    Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

    A writer spends a night on the streets

    Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
    Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

    UK's railways are entering a new golden age

    New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
    Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

    Conchita becomes a 'bride' on Paris catwalk

    Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
    Pétanque World Championship in Marseilles hit by

    Pétanque 'world cup' hit by death threats

    This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
    10 best women's sunglasses

    In the shade: 10 best women's sunglasses

    From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
    Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

    World Cup final: Messi? Mascherano is key for Argentina...

    No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
    Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

    Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

    18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
    Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

    Hollywood targets Asian audiences

    The world's second biggest movie market is fast becoming the Hollywood studios' most crucial