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Bank of England Pessimistic On Home Values

11-01-2010 08:39 AM CET | Business, Economy, Finances, Banking & Insurance

Press release from: Propacea Limited

In response to the savage cuts to public spending announced last week, the Bank of England has warned that property prices are unlikely to rise – and will probably fall – during 2011, as lending remains stubbornly low and household budgets are squeezed.

In September, mortgage lending fell to a 10 year low, with none of the traditional post-summer ‘bounce’ that agents were hoping for.

“In those parts of the country where many are at risk of losing their jobs, getting a mortgage is going to become increasingly difficult because of the uncertainty, which will have a negative impact on prices,” says Melanie Bien, of mortgage brokers Private Finance.

Jonathan Cornell, of First Action Finance, said: “There’s a chronic lack of funding in the market and with the austerity measures kicking in, the situation is going to get a lot worse. Anyone hoping for house price rises is going to be bitterly disappointed.”

Some experts have warned for years that the UK housing market had overheated and that multiples of home values over average wages were unsustainably high. The difficulty for the UK economy as a whole is that a sharp downward correction would put us back into recession and cause damage that will take a generation to repair.

The good news, of course, is that if you have spare cash and/or the ability to borrow, there will be bargains to snap up and (for the moment) low interest rates to provide healthy margins, along with a booming rental sector as social housing becomes progressively more limited.

For some, the good times may be just around the corner.

Original comment at Property Valuation Blog

This site is written and contributed to by property professionals from inside the UK House Building Industry.
That's right, we're developers - hated by all for our unwavering pursuit of profit and demonic need to concrete over the UK's greenbelt.
You may well wonder why we (as opposed to estate agents) are best equipped to advise you on the subject of selling property?
Surely our expertise lies in knowing how to buy land, put together development proposals, navigate the planning process and build identikit housing estates?
This is all true but it misses the one key point that our core goal (like yours) is to sell property for the highest possible price!
Just like you we also have to deal with flaky buyers, shoddy estate agents, slow solicitors and inept mortgage brokers.
The difference is, we do it on a daily basis and as such have become masters of managing the process.

Ashton House, Cornwall Avenue, London, N3 1LF

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