In its annual review of the market Halifax forecast that monthly falls would continue at 0.5 to 0.7 per cent for the rest of the winter. Prices would bottom out in the spring and start rising in the second half of 1993. However, the number of transactions has already picked up, and will continue to rise slowly, the society predicted.
'The UK housing market has finally reached its lowest point,' it said.
Halifax's economist, Gary Marsh, says house prices could end 1993 anywhere between 5 per cent down and 3 per cent up on the start of the year. Last year he revised his prediction of a 5 per cent gain back to a 2 per cent gain as it became apparent that the recovery expected after the general election was not going to happen. Prices have in fact fallen by some 8.5 per cent.
Abbey National also expects falls early in the year. But it is predicting a steady period in the middle of the year and gains towards the end, which will leave prices at about the level at which they started.
John Wriglesworth, housing analyst at the stockbrokers UBS Phillips & Drew, is more gloomy. He is predicting falls of around 5 or 6 per cent in the first half of the year and stable prices in the second half.
House moves are running at about half the 1988 level of 2.1 million. Transactions are already beginning to pick up and even if they remained at current levels activity in the market would be 10 per cent higher in 1993 than this year. But Halifax expects a rise of 15 per cent.
David Gilchrist, Halifax's general manager, said all the fundamentals were in place for a recovery, especially in London and the South-east, where house prices have fallen farther. 'Unemployment in white collar jobs, which are important in the economy of the South-east, seems to be tailing off.' House prices in the South are 15 per cent above the national average, compared with 35 per cent ahead in 1988.
Housing is as cheap now as at any time in the past 10 years. For example, a semi-detached house in Luton would have cost about pounds 76,000 in 1989, when the cost of an 80 per cent mortgage would have been pounds 620 a month. Now the price has come down to pounds 54,000, and the monthly cost, given the added impact of lower interest rates, comes down to pounds 300 a month. Wages have risen 25 per cent in those three years, so the burden of buying the house is much reduced.
Halifax is campaigning for the Government to reform mortgage tax relief to stimulate the housing market by directing it more at first-time buyers.Reuse content