For the past ten years the UK has been enjoying a massive house price boom, with property prices having rocketed by up to 200% in some areas within this time period. However, over recent months there have been many predictions relating to falling house prices, with experts stating that the decade long boom is over. There has already been evidence of house price falls in various parts of the UK, and according to officials house prices are set to face the first annual fall this year since the 1990s.
Recent polls taken over a six month period amongst analysts have shown that expectation of an annual fall this year have increased amongst industry officials. In October analysts believed that there was a 30% chance that house prices would fall on an annual basis this year. In January of this year the expectations rose to a 65% chance of an annual house price fall. Most recently, in March, the chances of an annual house price fall this year had risen to 78%.
Whilst industry officials admit that house price inflation had rocketed in the UK over the past decade, they added that the global credit crunch that spread across the nation last summer has made a huge difference to both the money and the housing markets. One official said: “Tightening credit conditions, weak purchasing power and a softening labour market will all prevent a resurgence in house price inflation.”
Another economist added: “The recent weakness in demand, evidenced by low levels of new buyer inquiries, will be exacerbated over coming months as the economy slows, unemployment begins to rise and job security is undermined.”
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