House prices to fall '20% in two years'.
Joblessness and spending cuts stifle demand
The property market is heading for a ‘double-dip’ as rising unemployment and spending cuts strangle demand. Interest rates are likely to be increased in the coming months to keep rising inflation in check and higher mortgage costs seem certain to add momentum to plunging property prices.
Property specialists expect prices to fall significantly in 2011 and 2012 with house prices decreasing by 20 per cent over the next two years, experts have warned that the average home remains up to 20 per cent overvalued – and with the mortgage market still tight and unemployment rising, 2011 could bring prices falling back to earth.
Many sellers, surprisingly, are unwilling to drop their asking prices, some are of course unable due to negative equity, however, we at Express Property have witnessed a high demand for our services and have been inundated with calls from sellers unable to sell on the market or frankly unwilling to pay the upfront fees for their property to sit on the market unsold for many months.
Low property demand is also pointing to falling house prices. Miles Shipside, director of Right move, said: ‘With lenders stating that they expect mortgage lending to remain static at around 2010 levels throughout 2011, and new seller numbers practically unchanged year-on-year, what might have been seen as a passing phase of low transaction levels in the housing market now looks set to be the norm for the foreseeable future. ‘He said only around 530,000 mortgages were taken out during 2010, while Right move recorded 1.3 million properties coming on to the market, highlighting the imbalance between supply and demand which has been putting downward pressure on prices.
