It does expect prices to continue to fall, by around 12%, although exact price falls will depend on the extent to which the mortgage markets improve. Most importantly, it thinks the worst is already over in terms of transactions.
It predicts: “At present the banks are pre-occupied with re-structuring, re-capitalisation and redundancies. But the government and Bank of England are now firmly on side. Bank base rate is already at a historic low of 2% and will fall to just 1% by spring. Coupled with the government’s new lower fees on guaranteeing bank borrowing, this will feed through into lower mortgage product rates and some people will once again find themselves in a position to buy homes. Criteria and product prices certainly won’t return to the levels we saw in 2006 and early 2007, but they will relax from current levels and by mid 2009 mortgage finance will be easier to come by. The biggest price reductions will occur in the first half of the year.”
Nicholas Leeming, director of propertyfinder.com, commented: “2008 was a traumatic year for the property market but the path ahead is now beginning to look more certain. Fiscal measures will boost confidence and help to make mortgage finance accessible again, and this will cause transaction numbers to slowly rise.
“By the end of the year, price falls will have slowed and areas less affected by the financial crisis may even start to see prices rise again. The fate of London and the South East will be more affected by the recession and the mid–to-top end of the markets here will be impacted by City job losses for as long as they persist. By 2010, the housing market across the UK will slowly, but steadily improve.”
