The rise or fall of house prices in 2006?
No doubt it’s curious to know what will happen to house prices in 2006. There are many predictions given by British real estate surveyors and lenders and it would be great to summarize such information.
One of the UK’s biggest mortgage lenders predicts that prices will rise during the next twelve months by 3%. The 2006 overview of the bank is that price growth is likely to remain below the long-term trend in 2006. Overall, house prices will not rise as fast as average wages, which should make property more affordable. Some growth in average earnings is predicted to be close to 5% as well as cuts in interest rates that help to prevent any slide in values.
The UK’s biggest building society predicts that prices will rise by up to 3%. It reckons the UK economy will recover next year and as a result there will not be any collapse in house prices. The prices seem to be optimistic but there’s also a warning that there may be a fall in early 2006, compared to strong growth in early 2005. The society’s forecasting track record is pretty good as they predicted annual UK house price inflation would be about 2% in 2005.
A property research company predicts that house prices should rise by 1% during the course of 2006. The group said the market was being starved of first-time buyers as people in their twenties and even thirties simply do not earn enough to be able to afford their own home. The company looked further into the future than the other forecasters and even predicted that prices would increase by an average of 2.1% a year over the next three years. The group has not been around very long to have much experience in forecasting. Last year, though, they said prices would remain unchanged while prices have fallen by 1.57%.
An independent economic research company predicts that prices will fall by 5% in 2006. The company believes that the UK housing market is still overvalued, despite price growth in 2005. The group argues that house prices have raced so far ahead of wages as to make purchasing property unaffordable for many first time buyers. The housing market situation is in danger as, for example, deterioration in the UK economy can lead to sharp house price falls as people lose their jobs and struggle to keep up with their mortgage repayments. Although the company is a long-standing one in the market, some of their predictions haven’t been proved right.
The Royal Institution of Chartered Surveyors predicts that prices will rise by 4% and will keep growing steadily during 2006-2007. The institution said that the number of properties being sold fell dramatically between late 2004 and the first half of 2005 and that this trend had now halted - a key indicator of housing market activity to rise from a five year low of 1.127m in 2005 to reach 1.336m in 2006. Last year the Surveyors called the market right, saying prices would rise by about 3%. They surveyed its members to find what they think about the future direction of house prices. This can mean that it is early in flagging up moves in house prices.
Forecasting has always been a difficult thing to do. You can’t get a definite answer what can eventually happen to house prices. The economy is unpredictable and the situation may change within a month. The information given above is general and is based on the predictions of some institutions. Just remember that each situation is a particular one and before you make some decision about buying or selling a home you should work independently with professionals.