UK House Prices Falling
It is predicted that the UK housing market will get worse before getting better. House prices will likely decline by seven percent this year as opposed to expectations of a one percent rise.
Although it was predicted that gross mortgage lending would reach £340 billion this year, new forecasts shows that it won’t go higher than £285 billion. The Times quotes Michael Coogan, director general at the CML.
“Over the next few months, lending volumes will get worse before they get better.The market is still very uncertain, but lenders are working hard to ensure that borrowers coming off fixed rates remain on track, that arrears and repossessions are minimised, and that pricing is as attractive as they can make it in a market where they must manage the demand for lending with caution.
The current situation might even change for the worse in coming year. Howard Archer, chief UK and European economist at Global Insight, says that house prices might fall by 9 per cent in 2009.
Though he admitted: “…it is looking ever more possible that house prices will suffer double-digit falls both this year and in 2009, given serious buyer affordability constraints, limited and often more expensive mortgages available due to ongoing very tight lending conditions, a deteriorating economic outlook and reduced prospects for further interest rate cuts in the near term at least.
Photo: © Vladimir I U L
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