Over recent months there has been a great deal of speculation with regards to house price movement in the UK, and a wide range of data has pointed to the fact that house prices are falling, which could create real problems for those that have recently taken out huge mortgages on expensive properties, although it does spell good news for first time buyers. The financial headlines are still filled with reports and speculation about house prices, leaving many concerned over just how fast and how hard house prices across England and Wales could fall over the coming year.

One recent report has suggested that house prices in England and Wales are now falling at the fastest pace since 1978, which is when records began – this data comes from the Royal Institute of Chartered Surveyors. Officials from RICS claim that every region of England and Wales are being affected by the house price falls, and have added that there are many factors that are affecting these tumbling house prices. There are a number of areas that have been identified as experiencing the most rapid decline on record, and for some homeowners this could lead to the age old problem of negative equity.

In addition to the value of homes falling, industry professionals have stated that many homeowners that do put their homes up for sale are experiencing difficulties in selling for a number of reasons. Tighter credit conditions is resulting in would=be buyers unable to get the finance that they need and therefore unable to purchase a property. Many would-be buyers are also put off by the talk of falling house prices, and are reluctant to saddle themselves with an expensive property only to find that it loses its value in next to no time. One industry official said: ‘Sellers are having extreme difficulty finding buyers. The market is just not performing as it should be as we approach the prime selling months.’

Some sellers are finding that the difficulty in selling their property means that they are having to accept lower offers from buyers simply in order to sell, so they are losing money on the value of the home as well as on the asking price. Another industry professional has gone as far as to say that house prices could plummet by as much as 20% over the next two years, so the average house prices would fall from £200,000 to £160,000.

A former advisor to the government, Professor David Miles stated: ‘I am at the pessimistic end of the spectrum, but I don’t think it should be seen as the pessimistic end because there are as many gainers as losers.’

By this he meant that whilst some homeowners could be dramatically affected by such as fall in house prices, there are those that stand to gain from the situation in the form of first time buyers looking to get onto the property ladder for the first time. However, even here there could be issues, as many may find that they are unable to get a mortgage at an affordable rate unless they can afford to put forward a significant deposit.

Recent additions:

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