S&P: House Price Forecasts
House prices will stabilise in the last quarter of this year as the low number of homes for sale more than compensates for the fact that houses still aren't affordable, forecasts Standard & Poor's.
'UK house prices will stabilize in the final quarter of this year about 7% lower than in December 2008, and remain roughly stable in 2010,' said Jean-Michel Six, Standard & Poor's chief economist for Europe.
This is much sooner than for the rest of Europe, where Standard & Poor's expects house prices to fall both this year and in 2010.The
Spanish property market is poised for worse, with prices declining until 2012, Six said.
He says affordability has improved much faster than in previous downturns, which he thinks points to the possibility that the period of falling prices will be shorter this time around.
While he said the high level of household debt in the UK could prove to be an obstacle to any price recovery, this will be offset by the lack of supply.
Andrew Sentance - a member of the UK's interest rate setting committee - said there are some signs that house prices have stabilised.'But signs that falls in house prices may have stopped is tentative,' he said.
Kate Barker, another member of the committee, is less bullish. 'We're not necessarily out of the woods in terms of housing because of potential rise in unemployment that will weigh,' she told the House of Commons Select Committee on Wednesday.
'There are reasonable signs activity is recovering' she said but said she's rather cautious about prospects for the sector for the next 12-18 months.
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