A question we would all like to know the answer to however the fact is no one knows for certain, but there are some signs of caution suggesting a fall in house prices is possible.
Firstly builders have been offloading stock at discounts, it may be that their liquidity position requires them to raise cash quickly, but it could also be that some may see the market getting a little difficult in the coming months.
Many banks also introduced stricter lending criteria at the end of November, some of the best-buy fixed rate deals were withdrawn and replaced with new products at a higher rate of interest. RBS also increased the deposit requirements on its key tracker product (currently with a rate of 2.89%) from 20% to 25%.
Some views coming from analysts are suggesting that the banks do not have confidence in the property market and some are now anticipating a “double dip” in house prices in 2010. Interestingly the Nationwide’s Chief Executive (Graeme Beale) was quoted as saying “The growth in house prices over recent months appears to be driven by lack of supply” and further … “growth in unemployment throughout 2010 will inevitably exert downward pressure.”
Going back to our heading, are house prices going to start falling? Our view is that it is likely we will see a fall in house prices in the coming months, but in the medium term we feel the market will start to recover on a more permanent basis.
