London-based Abacus Financial director, Matthew Fleming-Duffy, said: “The UK housing market is fairly stable at the moment however we should expect to see some downward pressure on prices in 2011.
“Mortgage lending is fairly subdued currently and the Mortgage Market Review is set to stifle criteria even further. The Bank of England will need to increase interest rates next year, probably in Q1, and the effects of the coalition’s period of austerity will soon be very much with us.
“But I think that the honest truth is that buyers aren’t being put off from purchasing homes, despite the constant bad news being quite depressing for all homeowners.”
Ray Boulger, senior technical director at John Charcol, thinks fears of a double dip for house prices, which he would loosely define as a further fall of about 10% in values, are overdone.
He said: “I think a double dip is unlikely. Falling prices have been influenced by consumer confidence and the recent spending review has and will continue to have an impact on this. But I think the government is deliberately making things sound worse than they are – it’s classic marketing.
“Consumer confidence will start to improve by the second quarter next year which will help to support house prices. The real silver lining for the housing market is that the longer it takes for the economy to recover, the longer interest rates will stay low, making mortgages more affordable.”
Chris Gardner, director of Essex-based broker Obligo, thinks the story will be different for brokers across the UK.
He said: “I think that we will see significant variations in differing regions. Areas with large volumes of lower priced property for example that would be taken up by first time buyers are suffering badly with agents telling us that more mortgages to these buyers are needed if a slump in values is to be avoided.
“On the other hand some agents report that good quality family homes near decent schools are still creeping up and sellers are getting asking price. The market is still in uncharted waters – and this is a once in a lifetime recession – I don’t think anybody can predict where this will end up – but if pushed I think this year’s gains will be wiped out in 2011.”
Gemma Harle, managing director of network TenetLime, agrees that the picture will differ regionally and says brokers must understand their area well.
She said: “The right property in the right location is holding up well however some areas are suffering and will continue to do so as public sector job losses work their way through the system.
“Falling house prices are bad for the confidence of first time buyers and affect equity levels negatively for remortgage business. In the current environment lenders do not need more excuses not to lend. The regional sensitivities of house price performance cannot be underestimated. Brokers need to really understand their own localities to know where to put the effort in.”
But Tom Cleary, financial services director at London-based Start Financial Services, thinks further falls would be positive for first time buyers.
He said: “A small reduction in prices will actually do us all a favour. As property prices fall, it should encourage more first time buyers to enter the market. Affordability will improve and the deposits required would be lower.
“For what it is worth, I actually believe that we will probably see more sales transactions next year, albeit at slightly lower values.”
Simon Tyler, managing director of Surrey-based Tyler Mortgage Management, highlighted the problem of having so much conflicting house price data in the market.
He said: “Statistical data is confusing in terms of the current trend as Halifax’s and Nationwide’s views seem to be slightly different in where we have been going for the past few months.
“I think it is reasonable to suggest that prices will be lower in 12 months than they are today given the lack of confidence in the economic resilience of the UK.
“But the long term prognosis (10-15 years) for prices still seems to be for growth over and above retail prices inflation as we demonstrably have a rising population and a chronic lack of new home building.
“We are currently undershooting the last government’s annual targets for new homes by 2020 by more than half and that will continue to have the effect of underpinning the market for some years to come. For long term investors the next 12 months look like a good time to pick up stock at a relatively low price.”
Dean Mason, of Hertfordshire-based Mason’s Financial Planning, added: “'Recent data from the major players suggests a cooling of the optimism on house prices we felt in the summer, although in the areas my clients are buying in (predominantly North London and Northern home counties) prices do appear to be still rising very slightly.
“I expect this to stop and values to stay the same or fall slightly as is traditional in my experience through the winter months. I don't see this as a 'double dip' though, just seasonal adjustment.
“It remains to be seen what effect the government’s spending review will have and I don't feel we will know this until next spring. I am optimistic for London and the South East at least as the 'Olympic effect' should start the influence homebuyers and developers next year.
“However for areas where many public sector jobs will be lost, such as South Wales, Sheffield and North East England, the recovery in prices is likely to continue stalling for a while.
“How much will prices change and how soon? The Bank of England and lenders have a part to play in this by oiling the wheels and keeping rates low whilst making lending more accessible, but only time will tell.”
