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Written by Rosalind Renshaw


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?

Comments

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    If Rightmove said it - it must be true! Anyone see Miles Shipside on Breakfast TV a couple of days ago?

    • 17 December 2008 04:40 AM
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    Re 30% of agents will close next year, I hope that wont take long, this industry has the reputation it has because of companies employing 20 year old mullet hair cut 205 GTi driving "agents" to take orders from vendors. The 30% cull will be very good for all concerned.

    • 16 December 2008 20:45 PM
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    I am confused please help! I fail understand what the "drop" in property prices is based on, when properties are NOT being bought or sold, the lenders are not lending, buyers and sellers are renting just to get through this period of "uncertainty". What are we comparing the prices with? I have been silly enough to think that the bankers had screwed up and were continuing to screw up. Please help.

    • 16 December 2008 11:12 AM
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    The miriad of Predictions are largely based on Industry information which is usually postumous and flawed. Virtually every prognosticator got it wrong last year, (Even if Rightmove claimed later they did predict a fall!) so it is purely speculation. Most comments, from industry people here are positive, but they are wrong, 2009 will be far worse that 08, as the real economy catches global recession, unemployment will hit 2.5mil (Maybe 3mil) and at least 2 more years of falling prices will only start to bring house prices in line with where they should be with incomes Vs long term averages. Remember, corrections always overshoot and rebound, it's one of the primary laws of economics.

    • 16 December 2008 09:28 AM
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    Prepare for the worst, hope for the best. Just make sure that whatever the number of transactions in your area are available, you get the lion's share, by focussing on service, service, service. The sooner you make your reputation for service your number one priority, the sooner you will begin to benefit and grow, no matter how bad market conditions get. And you'll get better fees too.

    Of course it wont be easy, but it can be done and is being done by some agents I know already, who despite everything are getting instructions at 2% fees but only accepting the instructions if the vendors are prepared to accept the agents advice on price. "We can sell your house, but its 2% and you have to follow our advice." Otherwise, they are politely refusing the instruction, because spending time servicing a client whose home you can't sell is as bad as burning money.

    Yes, the economy will get worse next year, but there will be more transactions than this year, I'm sure of it, so have a fun Christmas and prepare for some serious focus and service in 2009!

    • 16 December 2008 06:16 AM
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    I agree to a certian extent with all the comments, but I especially agree with Agentontheeast who suggests the Government help with deposits for first time buyers. Together with a low BBR, which will hopefully further encourage lenders to improve their products and increase (slightly) their LTV's, this should steady the market.

    • 15 December 2008 22:17 PM
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    Clive, Jim is right!! ps. i give you till march

    • 15 December 2008 08:36 AM
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    We were a sales agent when we opened our business three years ago, but now we only deal with lettings. We are seeing huge growth in our portfolio of managed and let only properties which eventually we will sell! Im simply not prepared for my team to waste their time with doing endless amounts of viewings for little or no reward! Im really confused by everyone talking about 'sticking in their' and 'not giving up on sales',well you don't have to but you should look at the feasability of changing some of your staff from sales to lettings and targeting landlords instead of vendors. It's quite obvious guys change your business model or shut next year, I know what choice I prefer!

    • 15 December 2008 04:34 AM
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    On Yahoo News page this morning the link to the Barclays story about house prices simply said "House prices to fall 30%". Only by reading the article could you discern that the story was about the anticipated peak-to-trough figure, rather than a further 30% as was the reasonable assumption of the helpful headline

    • 15 December 2008 02:37 AM
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    Helping the first time buyers will help the market throughout. Rather than the Government cutting VAT, raising stamp duty thresholds etc etc, (some) first time buyers need a student type loan to go towards their deposit. Most can afford repayments just not the deposit, so if the Government helped with first time buyer's deposits they could then get their mortgage (terms would be to pay back upon increase of earnings or the property being sold)away we go. What is stopping them?

    • 15 December 2008 01:20 AM
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    Clive. This is what happens. You agree a sale in December. Over Xmas, the husband gets really bored, and drunk, and flattens the wife. She want's a divorce. You come back in on Jan 2nd. Your first abortive. Well done mate.

    • 15 December 2008 12:30 PM
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    Well done Clive...there is no doubt sales are being agreed ...however wait for the property to value up! Thats where the problem lies at the momeent...good news nevertheless.

    • 15 December 2008 12:03 PM
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    I think common sense is the key next year, I now only have 1 member of staff and that is me!! My partner (my wife) has resigned from our company and is going back to work full time in another industry. I would just call on all vendors and buyers alike to practice some common sense next year! DO NOT market your property with the agent that values it the highest but listen carefully to the agent that offers you sound advice (even if you don't like what you hear). There are, and will be good deals to be done next year and we as agents can work hard to bring those together for you. I am learning now that you have to "tell it straight" to vendors, and if they do not like it...walk away.

    • 15 December 2008 12:03 PM
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    The public are often guided by the media and sensationalist headlines such as 'prices to drop 30%' will only spook the public further. Every commentator is of course entitled to their opinion and certainly the view of the Barclays head should not be ignored. However is is only the view of one person and there are clearly many more less gloomy opinions from other 'qualified' commentators that should aired also.

    Lets give the public the chance to make their own judgement. The editorial heads of the newspapers and braodcasters should lock themselves into an uncomfortable room with their doom and gloom journos and not come out until the realise that they are dragging this country down to eceonomic oblivion.

    • 15 December 2008 11:55 AM
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    Thanks Estate Agent Today for airing those predictions!
    The only thing we can be certain of is all those making predictions don't really know - anyway, who'd believe a banker?!!
    I think that values are already at a 25% discount to the peak in my area. Based on how much they fell by in '88/'93 we are close to the bottom. For everyone's sake let's try to be positive. 2009 WILL be better.

    • 15 December 2008 11:55 AM
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    I'M A SMALL AGENT THAT STARTED IN JUNE THIS YEAR. I'VE JUST RELIED ON LETTINGS AND SO FAR MAKING A LIVING. HOWEVER, JUST GOT MY FIRST SALE;HOOORRRAAAAAAYY!!!!

    IT WILL PICK UP, NO DOUBT ABOUT IT AS THERE IS TOO MUCH DEMAND (IN LONDON ANYWAY) AND BESIDES, WE ARE A NATION OF FIGHTERS AND NEVER WANT TO GIVE UP. WE'VE STRUGGLED THROUGH THIS YEAR AND IF WE'RE SMART ENOUGH, WE WILL DRAG BACK THE SALES MARKET AND START EARINING SOME BETTER REWARDS!!! THIS IS THE ATTITUDE, SO, START PREPARING FOR THE NEW YEAR NOW!!!!!

    • 15 December 2008 11:46 AM
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    If we can educate buyers to buy property as a home, rather than a way of making a quick buck, then we may be a third there however the other 2 thirds are up to the banks/building societies to start releasing funds and for the economy to stabilise...Oh dear!!!!!Merry Christmas also.

    • 15 December 2008 11:35 AM
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    Continued Meltdown. Job uncertainty is becoming more of an issue which will reduce demand even further. Banks will show even more writedowns which will constrain lending even further. We are experiencing a profound adjustment in capitalism itself as we now realise that the last 10 years of boom was an illusion built on counterfeit banking. The only hope for agents is lettings and selling repo's. Merry Christmas

    • 15 December 2008 10:07 AM
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