Another Gloomy Prediction For House Prices

Filed Under Finance

You would think that Estate Agents would be dancing in the streets as they celebrate the fact that gross mortgage lending increased by 15% in June, however some agents seem rather gloomy about the prospect for house prices, instead.

The strong rise in mortgage lending in June was mainly caused by an increase in the number of mortgage products available and also a welcome loosening of the lending criteria. LTV’s have improved slightly, however mortgages are still hard to come by.

I’ve heard from friends who are well placed financially, but have been turned down for mortgages during the last six months or so.

So why the pessimism about house prices for the rest of the year? Well, it’s down to the increase in the number of properties coming onto the market. There are more houses coming onto the market than new buyers looking for properties.

We all know where that imbalance between supply and demand leads – downward pressure on prices until the market becomes balanced again.

Hamptons the estate agents is saying that they have seen sellers reduce their prices by 5% and that sellers need to be realistic to attract buyers.

Look at the Hamptons prediction for the rest of the year, though:

“We anticipate a house prices adjustment through the second half of the year, more than reversing the gains since January. We expect prices to end up 1%-2% lower over the course of the year, before returning to moderate growth of 3% – 4% in 2011.”