According to a new Regional Planning report from Experian, “the UK economy and housing market will become direct casualties of the current worldwide credit crunch," with declining house prices set to affect half of the UK by mid 2009.
“Over the next two years, house prices are forecast to record the lowest annual increase since the mid-1990s, while repossessions are also set to reach 15 year highs,” says Andrew Burrell of the company’s Business Strategies division.
Lenders have set more stringent controls regarding buyers they will accept and the amount they are willing to lend. Meanwhile, lower consumer confidence regarding the general economy is leading to a more cautious approach to the housing market.
The report suggests the greatest declines will be seen in the West Midlands (4 per cent), while prices in the East Midlands are expected to fall 3.7 per cent. It believes the South West will register a 2.8 per cent decline, while Northern Ireland house prices are likely to fall 2 per cent. The South East will see just a 0.4 drop in value.
“The regional impact is uneven,” says Mr Burrell. “Greater London, where overvaluation is less severe than in the rest of the south, has the UK’s strongest short-term outlook after Scotland,” he adds.
Figures from housing company Bovis Homes appear to back up these claims. It suggests that turmoil in the financial sector has led to fewer house sales in recent weeks and that house prices are likely to fall.
Despite historically being the second strongest time of year for house sales, the company has predicted a 3 per cent reduction in prices for the 2007 autumn period. Average price is expected to be £178,000 for the 2007 autumn period compared with £184,000 last year. Sales volume is also expected to be “marginally” lower compared with the 3,123 sold during the period last year.
"Recent events in the financial markets have adversely affected consumer confidence, resulting in sales being lower than anticipated during the key autumn selling period," says Bovis chief executive, Malcolm Harris.
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