House prices: the latest forecasts, region by region

As the Nationwide announces UK house prices are now 6.3 per cent lower than a year ago, many of us are wondering when the property turmoil will end. The overall picture is bleak, with Savills, the estate agent, predicting a drop of 10 per cent this year and a further 15 per cent drop next year.  But this figure masks widespread regional variations, and it could be higher or lower depending on where you live.

Here are the experts' predictions on how much further prices will fall this year in each region of the UK.

London

There is a lot of stock on the market in London at the moment as buyers are being very cautious. James Hyman, of Cluttons, an estate agent in London, says: “I am seeing sellers reduce asking price by 10 per cent at the moment. I expect prices to ease another 15 per cent over the next year as buyers try to safeguard themselves from further falls in the market. If vendors are keen to sell, most will simply have to drop asking prices.”

South East

Although the south-east is generally more resilient to house price drops than say the North, it has still taken a hammering recently. Mr. Hyman says: “Where as parts of the north have seen falling prices for the last three years, this has only happened in the last 12 months in the south-east.
“Again, unless vendors are selling something very special or rare, they will need to reduce asking prices significantly to secure a buyer.”

Scotland

Scotland has been more resilient to price falls than the rest of the UK. Nonetheless Savills predicts that the turmoil in the property market means prices will fall by 5 per cent this year.
Faifal Choudhry, of Savills, says: “The expected fall is still significantly less than in other parts of the UK. Scotland has resisted a lot of the pressures of the UK’s housing crash, not just because of steady demand in cities like Edinburgh, Aberdeen and Glasgow, but because the average house prices have remained relatively low at around £150,000 – so borrowers are less stretched than in, say, London or the south-east.”

South-West

Estate agents in the South West are predicting a "flat" market for the rest of the year. Jonathan Haward, of The County Homesearch Company based in Cornwall, says: “Sellers will have to price properties very competitively to attract buyers. With the exception of a few period properties with coastal views, which are still selling quite well, prices will stagnate until confidence returns to the market.”

Northern Ireland

Northern Ireland continues to show by far the steepest correction in house prices across the UK with prices down 18 per cent over the last three months alone. Fionnuala Earley, chief economist at Nationwide, says: "The recent falls come on the back of unusually sharp increases in prices during 2006-7, when prices grew by 79 per cent. These increases were clearly not sustainable and leaves the market in Northern Ireland particularly vulnerable.”

Midlands

There are a very large number of houses unsold in Birmingham, Leicestershire and Lincolnshire. Nicholas Leeming, of Propertyfinder.com, says: “Vendors will have to continue reducing prices significantly to secure buyers this year.”

East Anglia

Andreas Bonney, regional director for Nolfolk, Suffolk and Essex at The County Homesearch Company, says: “It doesn’t surprise me that prices have already dropped 5 per cent in East Anglia. I would expect them to drop a further 5 per cent by the end of this year, with further small drops next year. I’m seeing buyers putting in offers of £250,000 on houses asking £325,000. It will be a long and slow recovery.”

North West

Gordon Roberts, who finds properties in Manchester, Merseyside and Cheshire at The County Homesearch Company, says: “The market is still moving downwards and we expect to see some further falls later this year. The properties worst affected are new build apartments in the centre of Manchester and Liverpool, where there is a massive over-supply. I’ve seen these apartments sell at auction for half of what they were bought for.

"Overall sellers of City Centre flats may have to take 30 or even 40 per cent less than their asking price by the end of the year. But I expect ordinary family homes to see a less dramatic drop in prices, probably at around 10 or 15 per cent this year.”

North East

The north east is already amongst the worst hit by the property downturn – and estate agents expect the market to continue to deteriorate throughout the year. Nicholas Leeming, of Propertyfinder.com, says: “Newcastle began to see house price falls even before Northern Rock. In places such as Durham, Northumberland and Leeds the market has effectively ground to a halt.”

Wales

Carol Peett at The County Homesearch Company says: “Whilst holiday homes or second houses in Pembrokeshire and Carmarthem are holding up well, the more run of the mill new-builds are falling by up to 10 per cent, and I expect to see this continue throughout the year. Properties in ex-mining communities are being badly hit, because there are simply too many houses.”

By Lauren Thompson

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Comments

[J Rogers]

Given that most of these predictions are coming from estate agents then it is is very worrying indeed. If an agent says prices will go down by 10% we can be sure they will fall by double that!

[gm]

New city centre flats in stoke on trent have allready had 35/45 percent knocked off,so much for the "regeneration".Most of these flats where bought off plan by buy to let landlords thinking they could make a quick buck.A flat bought for 70,000 has been sold for 45,000.

[slim]

the situation is much worse than you report. The housing market has actually frozen in most areas.

An asset has very little in the way of value if nobody wants to buy it.

[George Ball]

This is not America. Housing stock is very low in this country and the shock of new build stopping because they were designed for 100% mortgagees won’t help. Simply, there is no housing glut.

Anyone who can buy a house today would be mad to do so if they can avoid it, as prices are bound to continue to fall in the next few months. However, this puts an extra pressure on rental markets, which are holding up well. It is already cheaper to buy a house than rent.

As soon as first time buyers have saved up a deposit (good thing too!), I think the market will reverse.

[pedro tam]

Wonderful news that prices are beginning to fall at last! About time! They've had a good run. They've increased threefold in only 10 years. A major adjustment is well overdue to avoid much bigger problems later.

[Grayman]

I can't believe the fuss. The government was so worried about the ridiculous inflation of house prices that they were prepared to flatten the whole of the southeast under 1/4 million new homes to try to flood the market and bring prices down. Then as soon as the prices start to stall, there's a panic about stagnation in the housing market. Why?

[Will]

The absence of buyers is due to higher rates, more stringent lending criteria and a lack of mortgage products on the market. A situation engineered by the same banks who loaded up on dodgy US mortgage debt. UK homeowners are getting a particularly raw deal for no fault on their part.

[ez]

i just hope they keep on falling because it had only become a dream of buying a property for those who have just started work or have been in higher education. now i have chance of getting on the property ladder as soon as i graduate.keep them droppin

[Dectora]

SLIM. A house still has 'value' as a dwelling place, even were it to be unsaleable. (Use value I think it used to be called.) But then I view my own house as a place in which to live, not as an 'asset'.

[Ibrahim]

why are we all so uptight when house prices fall? After all we all need a roof over our head and the cheaper should be the better? We have been living in cloud cuckoo land with the idea that rising house prices, other than in line with general living costs, is a 'good thing'. Now at last its back to some sort of reality. First timers need to learn to save up for a decent deposit and not set their sights too high by going beyond their means as UK ltd has been doing for years!

[A. Johnson]

Real house prices, adjusted for inflation, increase on average by about 2% per year.

Over the credit cycle, in real terms, house prices always fall back to trend.

This cycle is approximately symmetric.

This time house prices have risen for about eleven years. Therefore they will fall for a similar period.

The nominal fall is determined by the real fall compounded by the annual inflation rate.

Relevant inflation is determined not by prices but by wages.

Median wages will fall because the UK is becoming increasingly unproductive relative to the global economy.

Therefore, nominal falls in house prices will be similar to real falls.

Thus, actual prices will be 35% to 50% lower by the middle of the next decade.

[Boris]

Ohh A Johnson You are a Tease...

[Alen]

Parts of Scotland have lost more than 5%: I went to an SVA property auction (May 7th) in Glasgow. Lot
19 was a 3 bed Barratt flat which
sold new in 2005 for 234,000. My friend bought it for 126,000. Sounds like a deal right? Not so,
the surveyor valued it much less
and my friend lost his 10% deposit because he couldn't secure a loan.
Five percent my eye.

[Andrew Waldron]

As a reader referred to this ten day old article by yourselves this very day, I am compelled to ask you this question. Why did you list the regions in this sequence? (Please further note your inconsistent punctuation).

South East
Scotland
South-West

[nick]

when I see houseprices in England
compared with the quality of houses in
germany austria switzerland I ask myself why are the english people paying so much for bad quality houses.
they have got no propper shower(2 handles) no isolation of the wall
micro plaster inside pipes not in the wall but as our grandparents on the wall.the new houses look like
as if the architect is still playing with lego and so on. be fair to yourself seeing most of the british houses 25 % of the asked price is enough.

[Basil Bell]

Nick from Gerrmany, WHAT!!!

Is there any further news about Ujima Housing Association......

[Mark Loggin]

Yet another crass article way off the mark predicting modest falls in the UK property market. Prices will come off 50% from where they are now, across the UK. It may take 2-3 years but it will get there. Don't worry.

[Short seller]

Hurray for the housing market SLUT.
I am a keen subscriber to the principle of shock economics, otherwise known as the Chicago school of free market economics.
I am gonna make a fortune out of you saps. I am gonna buy property off you while you are desperate and then i am gonna privatize your health, education, utilities and ultimately your air.
You will pay me for your greed.
Thank you.
PS in case you didn't recognize the irony, Watch out for the men in Grey suits bearing gifts.

[steven]

I think as too many house were built in the states causing a simple supply demand reversal, house prices started to go down. Developers laid off staff whose houses were valued less than there mortgage was worth and so left allowed repossession. This spiraled and increased the rate of falls in price as the rest economy began to fail due to reduced spending. Now the yanks knew this and wrapped the debt in pretty paper and sold it too guess who.
The Chinese government forbid a writes issue earlier this year as the cash was to be used to buy a famed European institution, as such, it appears they knew what was on the cards.
Now we are in the same situation and the Government and banks have spent our reserves. While we are only beginning our downturn the Americans are looking at reversing there fortunes early next year. We on the other hand, as all the self prophesying doomsayers above state, are only beginning. Prices will go down allowing first timers on the ladder, provided they are lucky enough to be in a job. I suggest buying a plot of land and Swedish type factory built package, as sooner rather than later, the property market will be dominated by quality of the fabric, which our luxury flays built in recent years definitely do not have.