Average UK house prices forecast to fall by 2% in 2011

KUALA LUMPUR: House prices in the UK are likely to remain under downward pressure for the first half of the year 2011. Weak demand, lack of mortgage finance and falling consumer sentiment are trends that will continue into 2011, according to Hometrack director of research Richard Donnell.

The London-based property market research house expects house prices to fall by 2% in 2011 after factoring in limited growth in real household incomes. Its latest UK house price survey show prices in about 71% of the country end lower in December than at the start of the year. Demand fell by 4.8%, the sixth month in a row as did supply (-1.5). The proportion of asking price achieved fell to a 16 month low (92.1%). Overall house prices fell by 1.6% from 2010 but in 15% of the country — notably London and the South East — prices in December are higher than they were at the start of the year.

The survey of over 5,100 agents and surveyors also found that the time taken to sell increased over the month to 10 weeks — the longest period since April 2009. The time on the market is now over three months for three regions — East Midlands, North West and Wales, Donnel said when revealing the survey results on Dec 27.

"An imbalance between supply and demand has characterised the housing market over the last 12 months. The first half of the year saw an overall price rise of 1.3%, but as the second half of the year began, supply and demand moved in opposite directions and prices between June and December fell by -2.3%," he added.

Over the course of the year, the supply of homes for sale grew by 24% while demand fell by 7%. In the final six months of the year, demand fell by 18%.