UK House Prices Expected to Decline In 2010

The latest house price forecast for 2010, which was made public by the Nationwide Building Society on Friday, November 20th, suggests that the British housing market should prepare for another double dip in house prices next year.
On the same day, Bloomberg published the results of a survey, carried out by Mr. Peter Woodifield, according to which UK house prices will decline by another 10% in 2010 and might only return to their 2007-level in 2014. The forecast made by Bloomberg was based on the results of a survey carried out among leading estate agents and economists of the United Kingdom.
While the vast majority of respondents claimed that the British housing market will need approximately half a decade to recover, Capital Economics experts said that the recovery of the UK property market should only be expected in 2019.
Ms. Seema Shah, Capital Economics’ housing economist, is determined that the property market is the UK is still overvalued. She said that house prices will be at their normal levels only if they decline by another 20-25%, and they will, says Ms, Shah. In her opinion, the recent rises in house prices were caused by imbalance between property supply and demand.
Meanwhile, other forecasts for UK house prices in 2010 are not so gloomy. For instance, the Centre for Economics and Business Research predicts a 4% rise in house prices in 2010, while the Citigroup expects a 5-10% increase.
While the depressing nature of the Bloomberg house price forecast is clear, Nationwide’s predictions, which are gloomy as well, might well be explained by the fact that the building society has recently reported a sharp decline in mortgage lending and profits.
Nationwide Building Society mortgage lending fell by as much as 47% in the first 6 months of 2009, to £70.5 billion, while its pre-tax profits dipped by 62%, to £143 million, down from £374 million.