Houses ~ Falls much bigger!!

'House prices to fall until 2010': the options for buyers and sellers
Last Updated: 12:56am BST 11/06/2008
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Homeowners are being warned to brace themselves for three years of falling house prices, writes Paul Farrow
There are signs that tens of thousands of borrowers are already being sucked into negative equity.
Ed Stansfield, at Capital Economics, said: "We had forecast price falls of 8 per cent this year and 10 per cent next year, but the 8 per cent figure is looking very conservative. It is now plausible that prices will fall by 15 per cent in 2008. When it comes to forecasting the direction of prices in 2010 it is a case of reasoning why prices won't fall further rather than the other way around. House prices falls tend to run in years not months."
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Surviving negative equity
The gloomy prediction comes as the number of homeowners in danger of falling into negative equity begins to rise. More than 23,000 homeowners took out 100 per cent home loans in the past year – and it is highly likely they are already in negative territory.
Weighed down: homeowners need to be prepared for difficult times in the housing market
The number of houses changing hands has also "collapsed" to the lowest level in 30 years. The fall in sales far exceeds the depths of the last housing crash in the 1990s and is the lowest since records began in 1978. The average number of houses that estate agents sold in the past three months was 17.4 - almost a third lower than a year ago, says the Royal Institution of Chartered Surveyors (RICS).
Miles Shipside at Rightmove said that those that were still looking to sell were being totally unrealistic – new asking prices were, on average still higher than a year ago. "Sellers have to drop their asking price by at least 10 per cent," he said.
Last month, Hometrack, the property research company said that property values had fallen eight months in a row, while Nationwide and Halifax, the two largest mortgage lenders, confirmed that house prices are falling year-on-year.
House sales fall is steepest since the 1970s, says RICS
House prices: News, views and data
RICS UK housing market survey, May 2008 [PDF Format]
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We have canvassed the thoughts of some other leading experts on how far they see prices falling – and what they would do if they were a buyer or a seller during these difficult times.
How far can prices fall and has your forecast changed recently given the ongoing gloom and fall in consumer confidence?
Alun Powell, senior UK economist, HSBC "The recent run of weak housing market statistics, including the very low levels of mortgage approvals for house purchase and falling house prices, has led us to downgrade our forecasts for house price inflation. We now expect that by the end of this year, prices will be 10 per cent lower than they were at the end of 2007. The bigger question is what will happen to house prices in 2009. Our view is that a weakening economy will keep the housing market subdued."
Melanie Bien, director Savills Private Finance "The UK mainstream market will fall 8 per cent this year and 2 per cent in 2009 assuming liquidity pressures ease by the end of the year. The worst case scenario is a 10 per cent fall in average values in 2008 and a further 15 per cent in 2009 taking values back to 2004 levels for UK residential."
Ray Boulger, analyst at John Charcol, the mortgage broker "I have changed a little. I expect prices to fall by about 9 per cent this year but to be recovering by the second half of next year."
Marc Goldberg, head of residential sales, Hamptons International "We have seen prices fall by around 10-15 per cent so far, since the peak of 2007 and it is possible we will see another 5 per cent over the next few months – which will mean a 20 per cent drop since summer 2007."
What would you do if you were a buyer?
Melanie Bien: "If I were a buyer I would find a property I liked and then seriously haggle on the asking price. It's important in a housing market downturn that you don't pay more than you need to, nor overstretch yourself on the mortgage.
"If I were a buyer without a deposit of at least 5 per cent (preferably) or 10 per cent and no likelihood of assistance I would return to old-fashioned values and save for one. Because there is a downturn you won't risk being priced off the ladder while you save and it will widen your options, give you access to a greater number of mortgages at preferential rates."
Mark Goldberg: "Analyse prices carefully. Prices are 15 per cent off the peak of last summer and some vendors have taken advice from their agent on this and adjusted prices accordingly. However, others have ignored the recent changes in the market.
"Ask the agent why the vendor is moving. There are always people moving for genuine reasons and these people are more likely to be realistic than those just looking to cash in on an investment. It is a more relaxed proposition buying in a down-turn though, as buyers can, on the whole, secure the price they want."
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