More forecasts for next year are still rolling off the various production lines – a triumph of hope over experience in our view, since absolutely no one forecast correctly what this year would be like. Still, that might have been just as well, as we’d all have been under a duvet since last January.
Anyway, here goes: Hamptons reckons house prices will drop by a further 5% in 2009, taking the overall drop to 30% since the peak of 2007. The good news is that it believes the residential market will bottom out as early as this spring, but that there’ll be no market growth until 2010. It also believes there will be 30% fewer estate agents in business next year.
SmartNewHomes also says house prices will fall a further 5% (have they been talking to Hamptons?) in 2009, but start growing again in 2010, and the number of new home starts will fall below 90,000 next year. It also forecasts low transaction levels to continue in 2009, and estimates there will be no more than 800,000 sales in total.
Barclays bank is more pessimistic, saying today that we are only halfway through the slump and that prices have a further 15% to fall next year. This suggests that prices have so far fallen by only 15%, however, which some agents might consider flawed. The predictions, by Barclay boss JohnVarley, are part of an interview to be broadcast on Sky News this evening.
The usually sunny Henry Pryor sounds severely depressed, saying that 2009 looks like it will be bleaker than 2008.
“The reality of what has happened will have sunk in for both buyers and sellers, and vendors will appreciate that their home is worth far less than they had thought, but, and it’s a big but, it should at last be possible for those who do want to sell to be able to do so. There will at least be a market.
“I suspect that repossessions will rise again in 2009. The number of estate agents will continue to fall (down by a third from Jan 2008) and the number of homes that do sell will rise again. Values will continue to fall as far as the traditional indices are concerned, with the likes of Nationwide and Halifax ending the year down 15%, the Land Registry down 20%, and asking prices a full 15% below where they are today.”
But perhaps the real people who matter are the consumers. FindaProperty did an online poll and found 88% of buyers believe property prices will fall next year and 79% believe that transaction levels will stagnate at the same levels as this year or fall significantly – a nasty sounding self-fulfilling prophecy which doesn’t bode well for agents.
In terms of when a recovery would come, few are expecting a revival in 2009, with 70% not predicting a recovery for two years or longer.
When asked what would speed up a market recovery, opinion was split between significant price falls (50%) and loosening of lending criteria (39%). Only a small minority of buyers however (11%) thought that Government action such as suspension of Stamp Duty or significant interest rate cuts would have any effect on the market.
Does any of this sound about right to you? Or is it duvet time?
The way next year is looking for housing market
15 December 2008