Experts predicting large house price falls next year have got it wrong, says Knight Frank...
Quite a few siren voices have been commentating on the housing market in recent weeks. They've argued that the current recovery is unsustainable, that prices have further to fall and that this, in effect, is a suckers' rally.
But contrary to those who see the recent uplift as a final irrational spasm, Liam Bailey, Knight Frank's Head of Residential Research, argues that predictions of steep falls next year fail to take account of why prices have risen in recent months.
In a detailed forecast of what will happen to the market between now and 2014, Bailey says:
"When we consider that the market has experienced low supply, very low mortgage rates and little competition from alternative investment options, price rises can be viewed as a reasonable response from the market."
Forecast for 2010-2014
Bailey, however, does accept that current price rises are unsustainable - especially if, as he predicts, stock levels start to rise.
However, he believes there are countervailing tendencies at work which will temper another round of double-digit price falls. Here's what he thinks will happen next year and beyond:
- House prices will end 2009 two per cent higher than at the start of the year, with the recovery being led from London and southern England.
- Annual growth of three per cent in Central London prices in 2010, with a steady increase in this rate to nine per cent in 2011.
- The mainstream UK market is likely to see modest price falls in 2010 (three per cent), before a limited rise in 2011 and a more concerted recovery in 2012.
- Aggregate growth for central London in the five years to 2014 of 38 per cent, compared to 19 per cent for the UK mainstream market.
recent news
- House prices return to September 2008 level
- Recovery hopes boosted as economy shrinks less than forecast and mortgage lending hits five-month high
related links
- Knight Frank research
But contrary to those who see the recent uplift as a final irrational spasm, Liam Bailey, Knight Frank's Head of Residential Research, argues that predictions of steep falls next year fail to take account of why prices have risen in recent months
