House prices 'likely to fall in 2012'

Posted: 10 Feb 2012 13:07:42 GMT

Suggestions that house prices may rise this year are misplaced, it has been claimed.

House prices in the UK are likely to fall this year, with rising unemployment and pay restrictions resulting in would-be home buyers being unable to afford more costly properties.

Paul Holmes, chief executive officer of Firstrung, explained peoples' wages are not going to escalate in the coming 12 months as they have in previous years, while the number of mortgages being handed out is currently as low as it was in 2003.

The industry figure pointed out the number of dwellings being sold at present appears to be on the wane, as the figures are around half of that witnessed in the boom period of 2006 and 2007.

Mr Holmes was speaking in response to recent figures from the Halifax Housing Market Confidence Tracker, which showed almost one-third of people in Britain anticipate house prices will increase this year.

According to the study, the headline House Price Outlook balance shifted into positive territory with a score of +7 percentage points - significantly higher than the -2 reported in October.

Mr Holmes, however, argued against the findings, stating any house price increase "simply won't happen".

He observed: "The only reason the housing market hasn't crashed so far is the amount of flight money that is poured into boroughs in London which is pulling up by its bootstraps, house prices in the rest of the country."

The expert predicted the cost of abodes in the UK is likely to dip by around three to five per cent over the next 12 months, as well as for the two years following, adding there "is no way" prices will move in the opposite direction in the remainder of 2012. 

Earlier in the month, the Halifax House Price Index revealed the rises in the value of abodes rose sluggishly throughout January, with the costs climbing 0.6 per cent across the four-week period.

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