The Royal Institute of Surveyors (RICS) monthly report shows house prices fell for a second consecutive month and are falling at their fastest pace in over 2 years, with 14.6% of surveyors reporting a fall in UK house prices.

RICS spokesman, Jeremy Leaf, said: “Although house prices continue to fall, the underlying economy remains strong. A major correction in the market seems unlikely while economic growth is above trend and employment conditions remain buoyant.

“The combination of rising interest rates, the introduction of HIPs and volatility in the financial markets resulting in tightening of lending criteria has certainly affected the confidence of buyers and sellers.

“As a result, some would-be buyers are turning to the rental market whereas others, conscious that the next move in interest rates is now likely to be down rather than up and market meltdown is highly improbable, are seizing the opportunity to negotiate with more flexible vendors in a less competitive market-place."

The Market Oracle forecast as of 22nd August 07 is for a 15% fall in UK house prices over the next 2 years.

UK Housing Market Forecast for 2008-09 - As of 22nd August 2007

UK House Prices to fall by 15% over two years, falling prices to be accompanied by cuts in UK interest rates. (22nd Aug 07), (1st May 07) (25th Sept 07)

By Nadeem Walayat
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Nadeem Walayat is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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Comments

GL
20 Oct 07, 12:40

housing Forecast

A fall of 15%? Is that really all you expect?

All those lovely 8x combined earnings, interest only mortgages have gone ...

Oskari Juurikkala
27 Dec 07, 07:55

UK House price falls

I agree that 15% sounds far too little to me, based on the fundamentals.

But of course, if the Bank adopts a hyperinflationary strategy to save the UK and global financial elite, then the fall may be small. But so in nominal terms only.

ishai
29 Dec 07, 00:55

House prices

The house prices and inflation rate are fundamentally dependent by causation.

House prices will fall down until the accumulated difference between inflation and house prices (from 1996 to today) is cancelled.

Expected fall down will be between 30% to 40% over the next 2 to 3 years , depending on the intervention of the government.

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