House price fall down to mortgage market
Mon, 14 Sep 2009
The news from the property market has been rather positive of late, with the Halifax, nationwide and HM Land Registry all showing month on month house price increases, however Ernst and Young’s Item Club* is calling it false dawn.
Despite these recent claims of a housing market recovery, E&Y Item Club believe a substantial drop in house prices should be expected during early 2010 and a 5 year wait for prices to return to 2007 prices. The club sights unemployment and a lack of affordable mortgage loans as the major contributing factors delaying recovery.
One of Earnst & Youngs economic advisors, Hetal Mehta, reportedly commented: "The current stabilisation in the housing market is a false dawn. Price rises largely reflect the acute shortage of available properties, with many homeowners either trapped in negative equity or reluctant to sell for fear of locking in the losses of the past two years. Mortgage lending remains depressed and with 56 per cent of owner occupiers having a mortgage, it would be difficult to make a case for a sustained pickup in prices without a recovery in mortgage lending . However, this would still appear to be some way off."