House prices slip again as buyers go missing
House prices could fall by 10 per cent over the next year, City experts forecast yesterday, as the latest data from Nationwide Building Society showed that property values slipped a further 0.3 per cent in November. Since the summer, the average British house has lost about £7,000 of its value.
The Nationwide's house price index has now seen a fall or stagnation in every month since June. Assuming no violent movements in December, prices will end 2010 flat.
The average property is down almost £7,000 from its recent peak of £170,111, to £163,398 in November. The all-time peak of £186,044 was reached in October 2007. The Halifax index shows a broadly similar trend, though it registered a surprising 1.8 per cent increase in October this year.
Howard Archer, the chief economist at HIS Global Insight, said: "This is fully consistent with our view that house prices will trend down gradually to lose around 10 per cent of their value from their peak 2010 levels by the end of 2011."
Others analysts, especially those linked to the market, are less gloomy. Martin Gahbauer, the chief economist at Nationwide, said: "There is little evidence to suggest house price declines are likely to accelerate in the months ahead. Much of the weakness in property values since the spring has been driven by a return of sellers to the market, following unusually low levels of property for sale in 2009 and early 2010.
"However, there is little to indicate that these sellers need to achieve a sale urgently for financial or economic reasons, which means that the downward pressure on house prices is only modest."
The Council of Mortgage Lenders (CML) puts the blame for the current weakness on the lack of mortgage finance and the departure of many specialist lenders and overseas banks from the British market.
New, tighter rules imposed by the Financial Services Authority on lending criteria are also said to be a factor. Other interested parties, including the Bank of England, point to a decline in demand for property, with the Royal Institution of Chartered Surveyors' index of new buyer enquiries showing a slowing trend.
The CML claims that between 2007 and 2010, as many as 800,000 potential first-time buyer households have effectively been frozen out of the property market, driven largely by the shortage of funding.
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