After a fifth consecutive month of UK housing price gains which largely erased losses earlier in the year, industry experts expect the market to come back down to earth in 2010. As property supply returns, prices are likely to drop in the overvalued market. See the following article from Property Wire for more on this.
Residential property prices rose again in November in the UK but are set to be flat next year, according to the latest index published today.
Property prices rose by 1.4% in November compared to a month earlier, according to the Halifax, bringing the average cost of a home to £167,664.
It is the fifth monthly increase in a row and means that prices have gone up 4.2% in the first 11 months of 2009 so that overall the annual decline is just 1.6% compared with 17.7% in April.
Also prices over the period September to November were 3.7% higher than in the previous three months, marking the biggest three monthly increase since November 2006.
Martin Ellis, the lender’s housing economist, said that the recovery has been driven by increased demand for property, largely due to the improvement in affordability for existing homeowners and first-time buyers who can raise the necessary deposit.
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But he expects the recovery to slow in 2010. ‘The prospects for the market will depend on how the UK economy evolves and whether there is a significant increase in the supply of properties for sale.
Overall, our view is that house prices will be flat during 2010,’ he added.
Last week, Nationwide reported that the average cost of a UK home rose 0.5% during November, to £162,764.
A difference in the samples used in the research means the Halifax rise was much higher.
Others are predicting that property prices will fall in 2010.
‘The continued rebound in house prices is hard to reconcile with the weak economic backdrop, the still-tight mortgage lending criteria and the fact that the market remains overvalued.
As a result, once the shortage of property on the market eases, we suspect that house prices will fall again,’ said Seema Shah, a property economist at Capital Economics.
But Simon Rubinsohn, Royal Institution of Chartered Surveyors chief economist, believes the outlook is slightly more optimistic.
‘While some measures of house prices appear to be suggesting a slackening in momentum, the latest figures from Halifax point towards a more buoyant picture.
The November increase of 1.4% follows gains of 1.1% and 1.5% in the previous two months.
On a straight year on year comparison, house prices on this index are now higher than they were a year ago although still 16% down from the high water mark.
This compares with the Nationwide index which is 12.5% away from the peak,’ he said.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.