Forecast of house price falls in 2011
New sellers dropped their average asking prices in December, the fifth fall in the last six months, according to the index.
Rightmove is forecasting that new sellers will have to drop their asking prices further during 2011, the extent to which hinges upon whether base rates rise and/or forced sale numbers increase substantially.
It believes that at best prices will be flat in 2011, but a drop by as much as 5% is predicted if sorely stretched lender forbearance buckles as prices fall and repossession numbers jump as a consequence.
The key elements of the Rightmove 2011 forecast are:
- Properties coming to market falling to circa 1.2 million, down around 10% on 2010.
- Transaction levels of around 600,000, continuing to run at circa 50% below historic norms for the second consecutive year.
- National average asking prices are forecast to fall by up to 5% during 2011 if repossessions increase substantially. Should lender forbearance continue to limit repossessions then prices could end the year closer to the price standstill Rightmove has recorded in 2010.
Miles Shipside, director of Rightmove commented: “In 2011 we will see larger falls in weaker markets due to over-supply and forced sales. Conversely, pockets of the country where demand remains credit crunch resistant and supply is traditionally low will see prices underpinned and somewhat immune from the falls in other areas.
“The fact that many would-be buyers do not have the ability to proceed, and some homeowners may find themselves in a position where they are forced to sell, drives prices down. These negative factors are likely to outweigh the positive price pressures of pent-up demand for housing and a price under-pinning shortage of quality homes in popular locations.
“This makes forecasting more of a lottery than usual, though the net result is likely to see average national asking prices fall slightly. At best they could be close to flat and at worst down by 5% if repossession numbers jump up from 1 in every 15 sales.”