UK House Price Forecasts for 2010 and 2011 Start to Dim
Only London and North West surveyors remained confident over the past 3 months according to the July 2010 RICS survey.
Last month survey showed us that South East England property stocks capitulated and this month the South East surveyors turned negative, for the first time, in their forecast for house prices for the rest of 2010.
All UK regions, including London, are now expecting property prices to fall in the next 3 months.
Sentiment is worst in West and East Midland and better in London, North and North West – but all regions, on balance, believe prices will fall during the rest of 2010.
Given that surveyors wouldn’t normally choose to talk the market down, this is a significant result and shows property price prospects have dimmed sharply.
Secondly, one of the more optimistic regions, the North West, has been reporting higher levels of expected sales than the number of sales actually achieved. Sooner or later reality has to catch up with hope and hence, when this occurs we can expect a further dimming of prospects for 2010 and 2011.
In the meantime, things are cooking up for a sharper fall in property prices.
Firstly, new buyer enquiries continue to fall moderately across the UK. The number of property sales is falling too, now at around 15 sales per surveyor, the lowest point in 10 years except during the very sharp fall in 2009. However other RICS data suggests we might reach the low levels of of property sales in 2009 again, sometime in 2011.
In the meantime, the number of new vendor instructions has rocketed. The July 2010 rate of increase has passed all previous 10 years peaks except the hike in late 2007. It seems owners and investors are rushing to the market to off load property as quickly as they can.
In the meantime, the number of unsold properties is now at 69 up from 66 in June and 62 in May.
The Autumn will be a torrid time for property sellers but is still too early for investors to consider entering the market.
The only good news is that interest rates are likely to remain low until 2011, but during 2011 rates will have to rise to around 2.5% and an increase of 2% and this will probably add around 50% to an average variable monthly mortgage bill.
Hence, it is clear that property prices will fall in the remainder of 2010 and all house price forecasts will predict a continuing slide in 2011.