The National Housing Federation has forecast that house prices will fall this year and in 2010 before recovering in 2011, contradicting the forecast made by Nationwide last week that prices could actually rise in 2009.
The federation expects prices to fall by 12.2% this year and by 4.6% next year before stabilising in 2011. It also warned that people who bought at the peak of the market may be in negative equity for the next 5 years.
House Prices Rose In June
The Nationwide this morning reported that house prices rose by 1.3% in July, the 3rd month in a row that prices have risen. Since the start of the year, house prices have now actually risen by 1.3%. Nationwide now expect prices to rise over 2009 as a whole.
Average prices are now 6.2% lower than a year ago, up from the 9.3% decline from last month. February showed the lowest point of decline in Nationwide figures, with prices down by 17.6% annually.
Nationwide commented that prices have been 'remarkably resilient' despite the recession, but warned that the current strong run may be unsustainable with rising rising unemployment.
Mortgage Approvals Up Again
Mortgage approvals were up in June, for the 5th month in a row. In June there were 47,584 mortgages for houses purchases, the highest number since April 2008.
Chris Skinner of Balatro, said that demand is still relatively flat as people still don't believe that the housing market has yet reached the bottom. He also said that house buying chains were being broken as a result.
There are also signs that banks are starting to make mortgages more accessible again, particularly with Northern Rock and other now state owned banks being encouraged to increase lending.
Building societies continued to see net withdrawals of funds, with 2.2bn more being withdrawn than being deposited in June, as refleciton of continuing low interest rates.
Mortgage Lending Jumps In June
Mortgage lending in June was up sharply on the previous month, with a total 12.3bn in lending, up from 10.5bn. Commentators have put the rise down to a seasonal increase and point to lending still being 48% lower than Jun 2008.
Lending over the past 3 months has been the same as the previous quarter, whch was at its lowest level since 2001.
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