Around about this time of year, everybody starts to make their predictions on what they expect 2009 to bring. Well they certainly do here in the UK, and I'd be surprised if it was much different in the US! When it comes to house prices, this years forecasts are of particular interest to EVERYONE.
Just like in the US, 2008 saw a pretty nasty time for UK real estate. Prices dropped dramtically, transactions decreased, and many estate agencies had to close their doors forever. In fact, 32,000 estate agents lost their jobs in 2008, nearly half of the entire estate agent workforce.
But is the worst over in the UK? Or is more bad news set to come?
Predictions for 2009 property prices range from the overly positive to the starkly bleak, Legal & General believe prices won't recover to their recent peaks for a decade. The Telegraph has a round up of predictions, with most agents reaching a consensus that prices will fall around 5-10% over 2009 and then start to pick up again. Most of the newspapers are running with Hometrack's prediction of a 12% price drop over 2009.
Looking back over 2008, our own stats at Globrix have shown that in some parts of the country up to one in four homes are still on the market having not sold all year. In Rochdale, Lancashire, as many as 26% of properties for sale have been stuck on the market waiting for a buyer since the beginning of 2008. Aberystwyth in Wales has also suffered, with 23% of homes for sale failing to find a buyer.
Globrix CEO, Daniel Lee, comments on what we've seen over the past year and how things are starting to look up for the New Year...
"It's been a terrible year for the property market. These end-of-year figures really do bring into sharp focus just how stagnant the property market has been in 2008.The gridlock in the market has been a result of the banks' reluctance to lend and an unwillingness by sellers to lower their asking prices to more realistic levels. Fortunately, in the past few weeks there have been signs that sellers are starting to accept that they need to drop their prices if they are going to attract buyers."
The predictions may differ for how 2009 will play out, but I think everybody can agree that the banks need to lend and sellers need to be realistic if the market is going to stand a good chance of recovery. That's what I think here in London, but I'm sure that message rings true in the US as well.