photo credit: russelljsmith
An estate agents’ group has predicted the prices of UK homes for sale are likely to go on sliding into next year following the release of a high-profile index.
Last week The Halifax published its regular house price index, which showed a slide of 5.2 per cent over the last three months.
The Royal Institution of Chartered Surveyors (RICS) said home loan costs would have to start coming down again before the market started to pick up.
RICS senior economist Oliver Gilmartin said:
“With growth expected to slow and unemployment on the rise, price declines will undoubtedly continue into next year.
“Measures aimed at kickstarting the flagging mortgage market are welcome and should hopefully encourage a decline in wholesale funding costs, the foundation on which many mortgage products are priced.”
He added a return to the “lavish” days of bank lending based on smaller deposits is not “in the offing”.
A slowing economy was likely to see more people defaulting on their mortgages, he said, meaning a conservative approach to lending would continue to hinder first time buyers.
RICS has more than 120,000 worldwide members and is one of the industry’s leading research groups.
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Its got to be good news for first time buyers providing that theyve got a decent deposit saved up.
Cheaper mortgages are not the sollution for first time buyers, cheaper houses are. It was the availabilty of easy to get cheap mortgages that caused the mess the banking system is in now.
It would not be the least bit surprising if house prices continued to slide in the UK.
As of late 2007, the Median Multiple (median house price divided by median household income) was more than 80 percent above its historic norm. This increase has mostly occurred over the past 10 years and the principal cause (as indicated in the Barker reports) has been the far too strict land use regulations. It was all made possible by the more liberal mortgage lending policies. But the extent of the increase — the housing bubble — was exacerbated by excessively strict land use regulation.
In US and Canadian markets with UK-style land regulation, the similar increases occurred. However, in markets without UK-style land regulation, there has been little change in the Median Multiple, even with profligate lending practices.
As the world financial crisis shows, the consequences of overly strict land use regulation range far beyond housing markets.
Wendell Cox
Co-Author, Demographia International Housing Affordability Survey
http://www.demographia.com/dhi.pdf
Principal, Demographia (St. Louis)
Visiting Professor, Conservatoire National des Arts et Metiers (Paris)