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Outlook: July saw the
return of rising average asking prices, albeit a very modest
increase. With hindsight, it appears that prices hit rock
bottom late last year and, apart from a minor blip in June,
have increased every month so far in 2009.
Miles Shipside, commercial director of Rightmove explains,
“There is now clear evidence that there were some fire-sale
prices last winter, when a few brave buyers correctly called
the bottom of the market. With growing confidence that we’ve
passed the bottom of the market, buyers are more active,
although they may discover that many of the best buys have
have already been snapped up.
Having seen the average asking prices rise
by nearly 7% so far this year and transaction levels bottom
out, the quandary for many existing and aspiring home owners
is the future direction of the housing market given the
continuing UK and global recession. Rightmove discusses
the three possible scenarios: a ‘Double Dip’,
a ‘steady state’ or a ‘resurgence’.
• The ‘Double Dip’ scenario
would see asking prices falling by 10% in the second half
of the year to end 3% down overall in 2009, as mortgage
lending remains tight, unemployment continues to rise and
many more repossessions come to market. This would give
a further window of opportunity for bargain-hunters who
missed out on the best buys last winter.
• The ‘Steady State’ scenario
would see prices stay flat for the rest of the year, ending
at circa 7% up, as both mortgage availability and the number
of sellers coming to market remain at historically subdued
levels.
• The ‘resurgence’ scenario
would see prices go up by a further 5%, ending the year
12% up, as buyer interest and mortgage availability pick
up significantly while supply remains relatively constrained.
While there are innate risks in forecasting, key indicators
increasingly suggest that prices have bottomed out. We have
seen a modest recovery in mortgage approvals and an improvement
but not an oversupply of new sellers coming to market. With
no real signs of increased mortgage funding or a relaxation
of high deposit requirements, the ‘Steady State’
is the most likely scenario for the remainder of 2009.
Historically low volumes will persist, which will mean
that asking prices have seen most of their gains for this
year. In areas of chronic under-and-over supply there will
be the scope for further price rises and falls, with unemployment-driven
repossessions dragging on into 2010 and 2011.
Shipside says, “Following a period of suspended animation
in 2008 when activity froze, we have seen a considerable
spring thaw. However, with only seven volume lenders remaining
in the lending game, including three government-backed institutions
that are prioritising their
balance sheets over new lending, we are set to bump along
the bottom for some time yet.
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