UK House Prices Are Expected to Drop by Another 14 per cent by the End of 2009

Jones Lang LaSalle, a global real estate services company, expects a further house price fall as low as by 14 per cent by the end of 2009. These predictions throw a shadow on more optimistic forecasts that report a slight pickup on the UK real estate market. James Thomas, the Head of Jones Lang LaSalle’s residential Investment team noticed that despite the first timid steps towards the recovery from the crisis, the UK economy is still in a tight spot. Besides there is a strong probability that the country will face a further growth of unemployment, which will have a negative impact on the UK housing market. Some real estate analysts, though, have reported the signs of stabilization of house prices, as well as house builders have pointed to a slightly growing activity. Mortgage lending went up by whopping 29 per cent in March 2009. While the previous month’s rise made up just 4 per cent. On of the property websites reported a 1.8 per cent increase in the quoted ask prices of homes in Wales and England over the same period of time. The National House Building Council got 10 per cent more applications over three months by the end of April on the previous quarter. However, the general application amount is still 53 per cent less as compared to last year. Jones Thomas also considers that the revival of the housing market is a temporary phenomenon that occurred due to the sharp drop in interest rates. Improved affordability of property and increased activity on the part of overseas investors who take advantage of the instability and temporary weakness of sterling also stimulated the animation on the real estate market. Mr. Thomas warned that over time the activity of overseas investors may decrease due to strengthening of sterling. The report by Jones Lang LaSalle alongside with a 12-14 per cent fall in house prices during 2009, predicts a further 1-3 per cent drop in 2010. Values in London are expected to go down by up to 18 per cent this year. The forecasts concerning the London housing market first green shoots of recovery refer to the end of 2010. A stronger recovery is expected in 2011-2012. But the Northern and Midland areas are predicted to fall behind. According to the forecasts, by 2010 average UK house prices will be 28 per cent below their peak level in 2007. Jones Lang LaSalle expect 2010 to become the beginning of the market recovery process, when low prices encourage the increase in demand, especially on the part of first time buyers that would not be scared away by a hostile unaffordable pricing policy of mortgage market. However, there are some more optimistic forecasts pertaining to the nearest future. King Sturge, rival property consultant agency, said they anticipate stabilized confidence in the residential market not later than next month. They expect the improvement in investment, home ownership and building in the next six months. Tim Wright, the Head of residential stated that the housing market is in 5 to 7 per cent of bottom now. Drop in prices and relatively low borrowing rates encourage people to buy property. He also noticed that more and more euro and dollar-based buyers are coming back to market. He didn’t deny the housing market is still exposed to risks, though, like the rise of the unemployment rate, for instance.