Fears that the UK is heading for a double-dip recession have prompted estate agents and homeowners to ask how quickly, and by how much, house prices will fall.
People who already have a contractor mortgage will be hoping the worst case scenario is not played out, but for those looking to get their first foot on the housing ladder, the current situation brings a modicum of hope.
First time buyers have been as good as priced out of the market in recent years. Even though house prices have been falling of late, mortgage lending institutions have been demanding high deposits that have been unaffordable for the majority of first timers.
We tend to rely on housing market surveys to get an accurate picture of what is going on, but they often provide conflicting information. However, in recent months they have all been providing downbeat news. In the last couple of weeks, both Nationwide and Halifax have reported that current house prices are lower than they were this time last year.
Hometrack’s latest survey shows that the number of new buyers in England and Wales has dropped for 15 consecutive months. Despite this, there is still a demand for properties. Richard Donnell, the research director at Hometrack, says that 8 million households in the UK own their property outright. A further 6 million possess a mortgage that is less than 50% of the value of their home. That makes 14 million households that could afford to move.
But the cost of moving home is prohibitive. The fees associated with getting a mortgage have increased and when you factor in the direct costs and the amount spent on ‘doing up’ a new place, it’s not surprising that people choose to stay put.
Capital Economics has predicted that house prices will decrease by 3% this year, and a further 5% in both 2012 and 2103. If they do then it just might become possible for first time buyers to afford to take that all important step.
© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.
