The housing market outlook for 2009

Worst-case scenarios for the UK property market this year and beyond envisage price falls of up to 50%, hundreds of thousands of homeowners falling into negative equity, debt levels remaining high, and zero interest rates for several years, along with ever more drastic moves by central banks to keep the economy from imploding.

[ClickPress, Mon Jan 12 2009] Worst-case scenarios for the UK property market this year and beyond envisage price falls of up to 50%, hundreds of thousands of homeowners falling into negative equity, debt levels remaining high, and zero interest rates for several years, along with ever more drastic moves by central banks to keep the economy from imploding.

A more realistic outlook, however, does not paint quite such a grim picture. The consensus among property experts is that prices will fall another 10%-15% in 2009, while the steps taken by the government and financial authorities will help in making credit more available.

Following a series of base rate cuts over the past four months, the Bank of England this week cut the rate to an unprecedented 1.5%. But whether or not this will help the mortgage market to recover sufficiently to prevent the property crash from worsening this year is questionable. While the cut will be good news for some 4.2 million mortgage borrowers who have base-rate tracker loans, mortgages will still be hard to come by, as banks may be no more willing to lend this year than before. First-time buyers will find a lower interest rate in taking out a mortgage, but most of the cheapest deals still require a 40% deposit.

The rate cut spells bad news for savers, especially millions of pensioners who rely on a monthly income from savings for their living costs.

The threat of repossession will also loom larger this year as unemployment climbs, triggering a flood of redundancies that will leave many homeowners unable to afford their mortgage repayments.

It is also questionable whether any lessons will be learned from this most recent boom and bust cycle, and whether the government will revise its stalwart commitment to increasing home ownership as much as possible. This commitment can be seen in the government’s efforts to lessen the plight of homeowners more than any other category of the population – which is good for homeowners but not necessarily for the economy at large.

What is certain, however, is that house prices will continue to fall in 2009, making the outlook particularly bleak for those seeking to sell their property. Conversely, for those who can get hold of a mortgage, the market offers great opportunities – 2009 will be a good year for buyers.




For press enquiries, please contact Phil Rendall on 020 7099 9026
Email: phil@dhbuyers.co.uk
Web: www.decisionhomebuyers.co.uk

News provided by Decision Homebuyers, a leading UK property company offering a quick and simple solution for selling your home, no matter what the condition.

Decision Homebuyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.

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