House prices could fall in 2010

Posted: 08 Dec 2009 11:39:12 GMT

British house prices are set to decline in 2010 and perhaps even continue this trend in the longer-term, according to MoneyWeek magazine.

Associate editor David Stevenson states this is despite reports from Nationwide that the value of housing has gone up by 2.7 per cent year-on-year after prices rose for the seventh month in a row in November.

Mr Stevenson writes that firstly, unemployment is set to continue to rise, with even the chancellor of the exchequer, Alistair Darling, admitting this fact.

A second contributing factor to the downturn in property prices will be that potential buyers are still finding it relatively difficult to secure home loans.

He went on to add that the current low interest rates that many homeowners are enjoying on their mortgage repayments will not last for much longer. According to Mr Stevenson, this factor could result in a rise in the number of borrowers falling behind on their payments.

Mr Stevenson is not alone in his thinking. Jonathan Davis of financial planning firm Armstrong Davis said to the BBC that the recent rise in house prices was a "false dawn".

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