Matthew Wall, Tuesday May 13, 2008
Property sales could fall by as much as 40%, according to a shock new report - but what effect is the slump in sales going to have on the value of our homes? We examine just how far house prices are set to fall
There's no doubt the property market is in decline - house prices have fallen for six months in a row according to Nationwide - but how much further are prices set to fall? It depends which set of figures you look at.
Prices are currently falling at a modest rate - Halifax figures show that house prices fell by 1.3% last month, based on its sample survey of 15,000 mortgage approvals. This figure outstrips the 0.4% fall recorded in March by the Land Registry, based on actual sales figures.
Sentiment is equally pessimistic. The latest survey from industry body the Royal Institution of Chartered Surveyors (RICS) claims prices are continuing to fall based on the opinion of the 300 estate agents surveyed.
Find the right mortgage for your needs
Will falling sales trigger a crash?
RICS predicts that property sales could fall by 40% this year as buyers shy away from increasingly expensive and restrictive home loans. And the number of mortgage deals on the market has shrunk dramatically by 76% to just 16,000, according to figures from website Mortgage Monitor.
The RICS prediction is consistent with earlier statistics which revealed that the number of house purchases between January and March (142,000) fell to its lowest level since 1975.
But a marked slowdown in the pace of the market won't necessarily trigger a collapse in property prices. Although the RICS report shows that the number of repossessions could rise to 43,000 in 2008, this is still a lot lower than the 1991 figure of 76,000. And with housing stock still at a premium, the RICS price prediction for the remainder of the year is a fall of just 5%.
