Savills, the upmarket estate agent, has given warning that the British housing market faces a “W” dip.
House prices are expected to rise about 4pc this year despite soaring unemployment and a 14.7pc fall in 2008.
However, according to Savills’ new annual forecast, prices will fall 6.6pc in 2010 as demand from cash-rich buyers runs out and poor economic conditions push homes on to the market.
Lucian Cook, a residential research director at Savills, said: “In the short term, we are facing events with the potential capacity to discourage house purchases.
“The uncertainty preceding an election – the prospect of public spending cuts, higher taxes, continuing mortgage rationing, further unemployment, possible stock market correction, inflation or future interest rate rises – all have the potential to impact the mainstream, even if the precise timing of such impacts is difficult to pinpoint.”
After 2010, Savills is forecasting that growth will pick up again with gains of 2.7pc in 2011, 5.5pc in 2012, 8pc in 2013 and 5.8pc in 2014, when the market will return to 2007 levels. Savills described the forecast as the “extended lower case w”.
However, this recovery risks driving a North-South divide into the market, with the equity-rich South not as badly squeezed. As a consequence, the North East will not recover to 2007 values until 2016, three years after London and the South.
“We could really see the emergence of a polarised mainstream market, with sharp regional and localised divergences between areas with high levels of equity and job security, and those which are more highly geared,” Mr Cook added.
Savills is forecasting that prime property will be shielded from the worst of any double dip.
In the high-end London market, Savills believes values will fall 1pc in 2010, rise by 7pc in 2011 and 11.1pc in 2012.
http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/
