CBER predicts 25% fall in house prices from last summer’s peak

Posted under General by Michael

UK property owners and those aspiring to own one are flooded with different predictions everyday regarding the fall in housing prices, creating more confusion and panic.

Last week, estate agents Knight Frank reported that house prices may drop 30% from their peak of summer 2007 and reach levels of September 2003.

The economic forecasting agency, Capital Economics, has predicted that the price fall would be 35% by next autumn, from its highest level of last summer. The agency had earlier forecasted a 35% fall by 2010, but reported that in the backdrop of economic downturn, it would fall much earlier than previously estimated.

However, forecasts by the Centre for Economics and Business Research (CEBR) indicated that the fall in value would be 25% from the peak. It believed that prices would not recover to the peak level of 2007 until 2013.

As a result of CEBR’s forecast, the properties of 2.5 million homeowners could slip into negative equity. According to the credit rating agency, Standard & Poor’s, 60,000 homeowners were being pushed into negative equity each month by the tumbling house prices. If these predictions proved true, the average value would fall to £157,058 by the end of 2009.

According to Ben Read of CEBR, the shortage of mortgages has dented confidence in the housing market and sellers were chasing fewer buyers. With the UK entering recession and household incomes falling due to an expected rise in unemployment, house prices could fall at a much faster pace.

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