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House prices 'to recover slowly' House prices 'to recover slowly'
(1 day later)
House prices in England will fall this year and next before recovering, the National Housing Federation forecasts.House prices in England will fall this year and next before recovering, the National Housing Federation forecasts.
It expects prices to fall 12.2% in 2009 and 4.6% next year, before stabilising in 2011 with a 1.1% rise and continuing to climb in the following years.It expects prices to fall 12.2% in 2009 and 4.6% next year, before stabilising in 2011 with a 1.1% rise and continuing to climb in the following years.
It predicts that, by 2014, house prices will be 20% higher than current values.It predicts that, by 2014, house prices will be 20% higher than current values.
But the group, which represents housing associations, said English homeowners who bought at the market peak could be in negative equity for five years.But the group, which represents housing associations, said English homeowners who bought at the market peak could be in negative equity for five years.
Although five-year forecasts can be unreliable, the group said that not enough homes were being built.Although five-year forecasts can be unreliable, the group said that not enough homes were being built.
Price predictionsPrice predictions
The group has suggested that house prices would fall sharply this year. This was in stark contrast to the view of the Nationwide Building Society which this week said there was a "reasonable chance" that prices in the UK could end the year higher than they started 2009. The group has suggested that house prices in England will fall sharply this year. However, last week the Nationwide Building Society said there was a "reasonable chance" that prices in the UK could end the year higher than they started 2009.
The reversal in 2011 would accelerate in 2012 with a 7.5% increase in prices, the NHF said, followed by rises of 8.4% in 2013 and 6.8% in 2014. The rebound in prices in England during 2011 would accelerate in 2012 with a 7.5% increase in prices, the NHF said, followed by rises of 8.4% in 2013 and 6.8% in 2014.
That would mean that English homeowners who bought at the height of the property boom would be in negative equity until 2014.That would mean that English homeowners who bought at the height of the property boom would be in negative equity until 2014.
"Our research shows that, while house prices are falling in the short term, they will inevitably increase in the long term because of a fundamental under-supply of housing," said NHF chief executive David Orr."Our research shows that, while house prices are falling in the short term, they will inevitably increase in the long term because of a fundamental under-supply of housing," said NHF chief executive David Orr.
Only 60% of new homes required to be built each year were being constructed, the NHF said.Only 60% of new homes required to be built each year were being constructed, the NHF said.
The group said that many young and lower-income people would remain locked out of the housing market until restrictions on lending by mortgage suppliers eased.The group said that many young and lower-income people would remain locked out of the housing market until restrictions on lending by mortgage suppliers eased.
Large deposits
Lenders are still keeping a tight grip on the mortgages they are offering to new borrowers, according to figures from the financial information service Moneyfacts.
There are still one hundred 90% loan-to-value deals to be found in the market, but consumers are paying a premium on the rate for only having a small deposit Darren Cook, Moneyfacts
Two-thirds of all deals currently on offer still require a down payment of at least 25%.
The number of deals on the market has risen in the past month from 1,574 to 1,662, the highest number since last autumn.
However, the growth has been among deals requiring deposits of 20% or more.
"Mortgage providers are continuing to maintain prudent criteria with regard to the amount that they are willing to advance relative to the property value," said Darren Cook of Moneyfacts.
"Even though the Nationwide has announced a fifth consecutive increase to its average house price index in July, providers still seem reluctant to venture out of the 75% tier safe haven," he added.
The number of deals asking for a down payment of just 10% has fallen back again, from 119 to 100.
There continues to be just a handful of deals asking for either a 5% deposit, or none at all.
"There are still one hundred 90% loan-to-value deals to be found in the market, but consumers are paying a premium on the rate for only having a small deposit," Mr Cook explained.