House Prices Will Fall No More Than 10%

The centre for economics and business research expects the number of property sales to increase as the combination of low interest rates, low property prices and improved loan conditions attracts buyers back to the property market. Experts at the centre for economics and business research say that if mortgage approvals rise up to 50,000 by late summer, house prices will fall no more than by another 8-10%. Others suggest that if mortgage approvals increase to 60,000-70,000, house prices might hit the bottom in the last quarter of 2009 as this will be enough to offset rising unemployment. The figures of the Bank of England demonstrate that mortgage approvals increased by almost 20% in February – from 31,791 in January to 37,937 in February. Indices of other financial institutions and organizations have recently seen the first monthly increases ever since the end of 2007. Several economists take the results with a pinch of salt, saying that the sample sizes are too insignificant and are based on a single month’s figures. Experts predict that house prices will hit bottom at the begging of 2010, which means that the rate of decline in 2009 should be much slower that what we have seen in 2008. According to Halifax, house prices declined by 17.7% to £160,327 during last year. The worst of the property price falls have already been seen, and the situation is beginning to improve slowly. However, mortgage finance is still very difficult to obtain, which means that the number of agreed transactions will remain weak unless the situation in the lending sector improves.