The continued economic turmoil may drive down house prices until 2010, according to Nationwide.
Figures from the nation’s largest building society show that prices have already fallen by almost 15% in the last 12 months, and chief executive Graham Beale believes the housing market has further to fall yet.
“Wholesale market conditions remain fragile and we expect the challenging economic environment in the UK to persist well into 2009,” says Beale. “We expect the housing market to remain subdued, with market prices likely to continue to fall in 2009/10.”
Beale also speculates that the mortgage will shrink to just £18 billion this year – down 80% on the £90 billion figure achieved in 2007. “It is already down to a third of last year's levels and heading lower.”
However, Beale did have some good news, pointing out that the recent base rate cuts will help minimise payment difficulties and alleviate payment shock as borrowers reach the end of their existing deals.
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Homes just aren’t selling
In another gloomy outlook for the housing market, the Royal Institute of Chartered Surveyors (RICS) is reporting that the number of homes changing hands hit a record low in October.
According to RICS, sales fell to an average of just 10.9 per estate agent during the three months to the end of October, compared to 11.5 in September. This is the lowest level recorded since the survey began in 1978.
It’s not hard to see why no one is buying at the moment. With a recession now seemingly imminent, fears over job security growing, house prices expected to fall for another year, and mortgage lenders sticking to their tight lending rules, it’s clear that any recovery in sales is still a long way off.
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